Romanian agricultural company Holde Agri Invest SA is grappling with a challenging financial landscape as it reports a significant increase in production alongside a decline in profitability for the first three quarters of 2023. Despite achieving a 31% production boost, yielding approximately 56,000 tons from its extensive land holdings across Romania, the company has encountered financial headwinds.
The paradoxical situation was highlighted by Holde Agri's management, with CEO Liviu Zagan noting that even though record harvests were achieved through advanced farming techniques and efficient management, which led to substantial indirect cost reductions—by up to 25% overall—the company still faced profitability issues. This was attributed to a combination of soaring crop establishment costs and a sharp decline in market prices for their harvest, which halved compared to last year's figures. The result was a drop in income to about RON76.6 million and losses reaching RON22.9 million.
In response to these challenges, Holde Agri is not standing still. The company has embarked on expansion efforts, including the integration of a new farm into its Contesti core unit, adding nearly a thousand hectares. Additionally, plans are underway to establish another core farm aimed at mitigating weather risks and significantly increasing their irrigated lands.
Looking forward, Holde Agri is preparing for a more resilient and profitable future by diversifying its crop production. The company plans to introduce irrigated corn and potatoes for chips next year. To support these ambitions and cement its status as a leading Romanian farmer, Holde Agri is bolstering its capital by up to RON40 million (USD1 = RON4.5594). These funds are earmarked for further land acquisitions as well as investments in current operations and enhancing long-term storage capacities for their produce.
The financial report disclosed an EBITDA loss attributed to the reduced market rates for their harvest and lower international quotes for agricultural products. This comes despite the production increase and area expansion that included technological equipment procurement and core farm acquisitions in Salcia and Contesti.
In light of these financial updates and investment announcements, shares of Holde Agri traded lower on the AeRO market today, reflecting investor reactions to the company's current economic position and its strategies for navigating the complex agricultural sector.
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