- AUGA Group, AB is set to announce its preliminary EBITDA guidance for 2024.
- The Group underwent strategic changes in Q3 2023, notably shifting a portion of its organic land to regenerative conventional farming.
- The estimated EBITDA for 2024 is projected to be EUR 23.3 million.
- Key assumptions for this forecast include changes in crop growing, dairy production, mushroom growing, biomethane production, and planned agricultural subsidies.
- The guidance reflects the Group’s adaptation to market dynamics and climate conditions.
AUGA group, AB, along with its subsidiaries (collectively referred to as “the Group”), is poised to reveal its preliminary EBITDA guidance for the year 2024. This announcement follows a period of significant operational changes implemented in the third quarter of 2023, marking a pivotal moment in the Group’s financial trajectory.
Strategic Changes and Market Adaptation
In a decisive response to shifting market dynamics and evolving climate conditions, the Group underwent a major strategic overhaul. The notable shift involved converting one-third of its organic land into regenerative conventional farming. This move was primarily driven by a decrease in organic commodity prices, attributed to reduced consumer demand and an oversupply in the market. The Group’s decision aligns with its commitment to resilience and sustainability, especially in the face of challenging winter crop rotations.
Forecasting Challenges and Transparency
Agricultural operations inherently face forecasting difficulties due to unpredictable weather and fluctuating commodity prices. The AUGA Group’s transformed business model further complicates the prediction of future results. In light of these challenges, the Group has chosen to provide an initial EBITDA guidance for 2024, emphasizing transparency and empowering investors with a clearer understanding of expected financial outcomes.
2024 EBITDA Projections
The Group estimates its 2024 EBITDA to reach approximately EUR 23.3 million. This projection is based on a detailed segment-wise gross profit analysis, considering various factors such as crop growing, dairy production, mushroom growing, FMCG, and biomethane profits. The key assumptions underlying these estimates include:
- Crop Growing: Transition of 15,500 hectares to conventional agriculture with specific projections for winter wheat and rapeseed cultures.
- Dairy: Stability in dairy cow numbers and milk production, maintaining similar yield and price levels.
- Mushroom Growing: Expectations of steady prices, yields, and cost management.
- Biomethane: Utilization of two-thirds of production capacity, based on current price levels.
- Subsidies and Expenses: Anticipation of EUR 13.4 million in agricultural subsidies and consistent depreciation expenses.
Operational and Financial Outlook
The OPEX for 2024 is based on historical performance, adjusted for recent changes in cost levels and the overall business model. The Group’s strategic shift, though complex, is a calculated step towards aligning with current market trends and environmental considerations. This forward-looking approach underlines AUGA Group’s commitment to sustainable and profitable operations amidst a dynamic global agricultural landscape.
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Interim Financial Results (2023/12/01)
The Auga Group faced financial challenges due to decreased purchase prices for organic products. To address this, they implemented regenerative conventional farming methods. The crop-growing segment reported an average yield, except for beans. The dairy segment faced an 18% drop in milk prices, resulting in a gross loss. The mushroom growing segment reported a significant improvement in gross profit. The FMCG segment saw a slight decrease in sales revenue but a 16% increase in gross profit. Operating costs increased primarily due to marketing expenses, investments, and higher employee pay. The Group continues to develop sustainable technology projects.
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AUGA Group has announced changes in its management structure to focus on technology development. Kęstutis Juščius will head AUGA Community, while Elina Chodzkaitė-Barauskienė will take over as interim CEO until a new CEO is elected.
Reports 20% Increase in Sales Revenue for H1 2023 (2023/09/01)
The Group’s sales revenue for H1 2023 was EUR 40.93 million, a 20% increase YoY. But its gross profit decreased to EUR 3.07 million from EUR 12.43 million in H1 2022, and EBITDA dropped to EUR 3.57 million from EUR 15.05 million last year. Segment-wise, Crop Growing’s revenue increased but gross profit dropped. Dairy reported a gross loss, while Mushroom Growing’s sales revenue increased, with a gross profit of EUR 1.00 million. FMCG sales rose 52% to EUR 4.14 million, with a gross profit of EUR 0.98 million. The CEO stated that the Group is implementing operational changes focused on developing agricultural technologies and sustainable farming standards, and has diversified its activities. Operating costs were up to EUR 7.37 million, and the Group presented a new business model based on sustainable farming technologies, cooperative organization, and supplying more sustainable food products.
AUGA Group: Expanding Sustainable Agriculture (2023/08/08)
AUGA Group, AB, a leading agricultural company based in Lithuania, is dedicated to sustainable agriculture and environmental responsibility. The Group is taking bold steps to expand its sustainable agriculture footprint internationally and make a significant impact on reducing emissions from the agricultural sector. Under the visionary leadership of CEO Kęstutis Juščius, AUGA Group has been consistently implementing the objectives set out in its strategy to develop sustainable agricultural technologies. These technologies aim to reduce emissions from agriculture while enhancing productivity and efficiency on farms. The Group’s initiatives include the development of innovative emission-reducing technologies, such as biomethane and the electric-powered tractor AUGA M1. The Group aims to create a broader impact and foster a sustainable farming community by collaborating and sharing knowledge on a cooperative principle.
AUGA Group Finalizes Sale of Kooperatinė Bendrovė “Grybai LT“ Shares to Linas Agro Group’s Kauno Grūdai (2023/07/24)
On July 21, 2023, the AUGA Group sold 100% of shares in Kooperatinė bendrovė “Grybai LT” to Kauno Grūdai AB for EUR 16,327,365.26. The Company produces organic food products that are exported to 30 countries and accounted for 8.9% of the AUGA Group’s revenue in 2022. The sale will enhance AUGA group’s consolidated profit by about EUR 7-8 million.
AUGA Group’s Cooperative Model for AgTech Innovation (2023/05/22)
AUGA Group announced changes in its management structure to focus on technology development. CEO Kęstutis Juščius plans to transition to the company’s newly elected Board to head the AUGA Community. Elina Chodzkaitė-Barauskienė has been appointed as the interim CEO to ensure a smooth transition. In H1 2023, the Group’s sales revenue increased by 20% YoY, but gross profit and EBITDA dropped. The Group aims to expand its sustainable agriculture footprint internationally by developing innovative emission-reducing technologies and sharing knowledge on a cooperative principle.
AUGA Launches Hybrid Tractor for Sustainable Farming (2023/02/17)
The AUGA group, an agtech company and organic food producer has unveiled its AUGA M1 hybrid tractor, representing a significant development in the agricultural sector. The new tractor reduces carbon dioxide emissions by up to 100 tons a year compared to diesel-powered counterparts, making it a sustainable solution for reducing pollution and improving farming practices. Powered by biomethane and electric drives, the design of the tractor accommodates larger biomethane gas cylinders and offers a quick and convenient gas cartridge replacement. The AUGA group’s commitment to developing sustainable technologies will help farmers work more sustainably, reducing their carbon footprint and offering consumers the opportunity to choose food at no cost to nature. The company plans to start mass production this year and aims to use the new tractors worldwide.
Image provided by AUGA Group