AUGA group, AB October, 2019 Europe’s la larg rgest st org rganic nic fo food pro roducer cer fr from m fi field ld to shelf lf 1
COMPANY HIGHLIGHTS AUGA group, AB, headquartered in Vilnius, Lithuania, unites 133 companies which undertake agricultural, food production and processing, supply chain and administrative activities in the following segments: Crop growing Dairy farming Mushroom growing End-consumer products 2
EXECUTI ECUTIVE VE SUMMARY ARY The largest vertically-integrated organic agriculture • company in Europe. EUR 55 m revenue, 38 thousand ha of land. • All processes controlled from seed to final product, • Overview developing and applying sustainable technologies in farming and food production. Listed on Nasdaq Vilnius and Warsaw Stock exchange • (ticker: AUG1L). Large scale organic supply from one source with full • traceability. Key Wide range of organic commodities and end-consumer • strengths products. Management of the whole value chain. • Certified: EU Organic, USDA, BRC, Kosher, Global GAP. • Focus on only organic and sustainable food production. • Achieving efficiency by utilising scale of operations, • synergies among different agricultural sectors and applying Strategy the latest scientific knowledge to improve all production processes. Growing share of high value-added end-consumer • products using proprietary and contracted manufacturing, with full process control from field to shelf. 3
TRANSFORMATION MILESTONES 2014 2014 2015 2015 2016 2016 2017 2017 2018 2018 2019 2019 Merger r of Agrowill ill Start rt of organic ic 2nd transit sitio ion n year Fully y certif ified Successful ssful SPO on New management nt model Group up and Balt ltic ic farm rmin ing New compan pany y name organic nic farm rming ing NASDAQ DAQ Champs ps AUGA A group Acquisition of Acquisition of KTG Agrar Raseiniu Agra New era begins for the Launch of organic Launch of organic Launch of organic Sales growth of Expansion of product range and company, mushrooms packaged vegetables soups, milk and grain branded end- export markets new main shareholder products consumer products 4
OPERATIONAL ASSETS AUGA group gains efficiency of returns through leasing of land rather than low returns as an owner, operating Location of AUGA farms and in the most fertile areas of Lithuania. land quality in L Lithuania Currently, 8.4% of cultivated land is owned, the rest is managed on the basis of long-term lease agreements. Managed land, ha Organic Transitional Conventional Land quality points 60 - 100 50 - 60 1 7,5 45 - 50 4 40 - 45 35 - 40 1,6 30 - 35 37,6 25 - 30 30,7 29 15 - 25 25 23,4 1 - 15 2015 2016 2017 2018 2019 Source: https://www.vzf.lt/?naujienos=atnaujinti-zemes-nasumo-vertinimo-erdviniai-duomenys 5
SHORT SUPPLY CHAIN The group’s ability to accumulate large volume of organic commodities allows to employ in-house and contract manufacturing model for various products to ensure traceability and to control the whole value chain from field to shelf. CONTR NTROLLED LED AND ENSURE SURED D TRACEA CEABILITY LITY OF PRODUCTI DUCTION ON CHAIN N Retaile lers rs Wholesaler salers ORGA GANIC IC END- CONSUME SUMER R PROD ODUCTS UCTS Consum umers rs OWN/CO CONTRA TRACTED CTED OWN RAW PROCE CESS SSING ING MATE TERI RIALS Farmers rs ORGANIC IC CO COMMO MODITI TIES Trade ders rs Proce cesso ssors rs 6
AUGA GROUP’S EXPORT MARKETS Contracts with major retail chains: 2018 sales s geogr graphy 22% 78% Lithuania Export (incl. traders) 7
ORGANIC WORLD In 10 years consumers have more than tripled their consumption of organic products and demand continues to grow. CAGR of organic food market in the EU was 9.8% from 2004 to 2017, in USA 11.2% from 2004 to 2018. In 2017, global organic sales reached EUR 92 bn (EUR 37.3 bn in Europe, EUR 43.3 bn in USA). Most European markets continued double-digit growth in 2017: France (18.0%), Denmark (14.0%), Spain (16.4%), Austria (11.7%). Organic c food d produ ducts cts retail sales, s, EUR bn By country try in 2017, EUR bn bn 50 DE (2018) 45 40 FR 35 30 IT 25 20 CH 15 10 SE 5 0 2004 2006 2008 2010 2012 2014 2016 2018 0 2 4 6 8 10 12 Sources: http://www.ifoam-eu.org/en/organic-europe ; http://www.organic-europe.net ; https://www.organic-world.net/yearbook/yearbook-2019.html ; 8 https://statistics.fibl.org/world/retail-sales-world.html?tx_statisticdata_pi1%5Bcontroller%5D=Element2Item&cHash=35a0fcd89ae099d2ff14fe1ddb38a1aa
ORGANIC RETAIL SALES VS. FARMLAND IN EUROPE Retail sales of organic products grow faster than their supply capacity (farmland). In 2017, European organic farmland area increased by 14.7%, while sales grew by 11.7%. Organic certifi fied ed land area and retail sales s in E Europe pe Sales Area 9 Source: http://www.ifoam-eu.org/en/organic-europe ; http://www.organic-europe.net
ORGANIC VS. CONVENTIONAL PRICES Prices of organic products are twice as high and less volatile compared to conventional. Germany, the largest EU market, is a benchmark for major organic products prices. Organic c vs Conven venti tional onal raw milk price in Organic c vs Conven venti tional onal wheat price in Lithuania and Germany, EUR/t Germany, , EUR/t 60 500 50 400 40 300 30 200 20 100 10 0 0 January April July October January April July October January April July October January April July October January April July October January April July October January April July Janurary April July October Janurary April July October Janurary April July October Janurary April July October January April July October January April 2013 2014 2015 2016 2017 2018 2019 2014 2015 2016 2017 2018 2019 Organic milling wheat Organic feed wheat Germany organic milk Germany conventional milk Conventional milling wheat Conventional feed wheat Lithuania organic milk Lithuania conventional milk Source: www.ami-informiert.de , http://www.stat.gov.lt/; https://www.bmel-statistik.de/ 10
SUSTAINABILITY TREND: MORE THAN ORGANIC Susta tainabl ble e products ts* sales es in t the U.S. Susta tainabl ble e products ts share e of sales *Sustainable products include free from, clean, simple, sustainable and organic labels Source: https://www.nielsen.com/us/en/insights/article/2018/was-2018-the-year-of-the-influential-sustainable-consumer/ 11
FO FOCU CUS S ON ON SUSTAI TAINABILITY ABILITY AUGA group is committed to the development of sustainable agriculture and does more than required by EU organic regulations. The following practices are employed: Min-till till tec echnology Closed ed-loo oop p organic c farming g model Certifi fied ed green en energy gy developed by the group aims to achieve is used in all of production applied on 85% of cultivated agricultural land preserves soil synergies among different branches of and administrative facilities, from erosion, saves agriculture and the re-use of organic in part produced by the waste. Farming activities, such as crop group’s companies biodiversity and reduces fuel consumption, resulting in lower growing, dairy farming and mushroom themselves from renewable GHG emissions. growing supplement each other. energy sources. MIN-TILL GRE REEN EN EN ENER ERGY For more information, click here to view annual Sustainability Reports of AUGA group. 12
SUSTAINA TAINABILITY BILITY AG AGENDA NDA FO FOR R THE HE FU FUTU TURE RE The biggest global challenge or our time is climate change: 23% global human activity caused GHG emissions is attributed to agriculture 1 . 91% of AUGA group’s GHG emissions arise from the three areas of agricultural activities: fossil fuels on farms, cultivated soil and cattle enteric fermentation 2 . AUGA group’s long -term objective is to fundamentally reduce its climate impact by implementing the following projects in the future: Specialised sed feed technolo ology gy to ensure forage preparation and Biogas s applicati tion on techno nologi gies es feed composition in order to to substitute fossil fuel in substantially reduce CH2 agricultural machinery, having emissions from bovine developed a biogas-powered enteric fermentation. tractor, and in the future to Specialised feed extract biogas from cow Crop rotation on improvem vement ent manure, utilizing the process to achieve the increased by-product organic digestate proportion of crops with as efficient low N2O emissions carbon sequestration and fertiliser. nitrogen accumulation N2O properties, thus, absorbing CO2 CO2 from the atmosphere and reducing N2O emissions. (1) The Intergovernmental Panel on Climate Change by United Nations report 2019 https://www.ipcc.ch/site/assets/uploads/2019/08/Edited-SPM_Approved_Microsite_FINAL.pdf 13 (2) Company information from the Sustainability Report 2018 http://auga.lt/en/for-auga-investors/sustainability-report/#tabs
Recommend
More recommend
