Beijing, China
March 6, 2014
Agria Corporation (NYSE: GRO) (the "Company" or "Agria"), a global agricultural company, today announced its financial results for the six months ended December 31, 2013.
New Segment Reporting Structure
The Company has adopted new segment reporting of revenue and profitability for the first half of fiscal year 2014 and onwards. The new reportable segments are considered to better reflect the results of operations carried out in line with the Company's integrated and global strategy. The Company also believes that the new segment reporting will offer a better understanding of its global strategy to shareholders and stakeholders.
The Company now reports on three business segments: (i) Seed and Grain; (ii) Crop Protection, Nutrients and Merchandise; and (iii) Rural Services.
Seed and Grain - This business segment is engaged in research and development, production, and sale of seed products including forage, turf, maize, corn, cereal and vegetable seeds. Its business also includes multiplication of seed for international customers and trading of seed and grain products globally.
Crop Protection, Nutrients and Merchandise - This business segment operates an extensive chain of retail stores that supply farm input materials including chemicals, fertilizers, pollination products, frost protection products, fencing, animal health and nutrition products, grains and seeds, clothing, leisure goods, and gardening equipment. It offers a wide range of plant nutrition options, supported by industry-leading knowledge of the specific products and application protocols.
Rural Services - This business segment offers a variety of services critical to the agricultural economy, including:
Livestock - Livestock agents for sheep, beef, dairy, and deer farmers, meat processors and livestock exporters. The primary service is trading livestock through auctions, private on-farm sales, and online or direct sales to meat processors;
Wool - Sales agents for sheep farmers, primarily through auctions, forward contracts and private sales; and providing comprehensive range of services to grower clients and wool processors including on-farm assistance, in-store wool handling and export processing;
Irrigation and Pumping - Design, construction, installation and servicing of irrigation and pumping systems;
Real Estate - Real estate brokerage primarily focused on farm sales with additional transactions in lifestyle and residential properties; and
Insurance - Insurance brokerage providing a range of market-leading insurance products.
The segment information presented below for the six months ended December 31, 2012 has been restated in accordance with the new reporting segments.
Financial Highlights for the Six Months ended December 31, 2013:
Consolidated revenues were RMB3,216 million (US$531 million) for the six months ended December 31, 2013, an increase of 6% from the same period last year. The increase in revenue was due primarily to restored strength in the Crop Protection, Nutrients and Merchandise segment, which grew 10% due to market growth and increased market share of certain key product categories.
The Company recorded operating income of RMB94 million (US$16 million) for the six months ended December 31, 2013, compared to operating loss of RMB319 million for the same period last year. The operating loss for the prior period includes a one-off impairment loss on land use rights and non-current prepayments of RMB357 million. Operating income excluding impairment loss on land use rights and non-current prepayments for the prior period was RMB38 million. The significant improvement in operating income was due to solid improvement in profitability across all three business segments.
Net income attributable to shareholders was RMB11 million (US$2 million) for the six months ended December 31, 2013, compared to a net loss of RMB375 million for the same period last year.
The Company's financial position strengthened during the first half of the fiscal year. As of December 31, 2013, cash and cash equivalents were RMB187 million (US$31 million). Total bank debts as of December 31, 2013 were RMB848 million (US$140 million), a decrease of 19% from June 30, 2013.
The Company refinanced a substantial portion of bank debt in December 2013 at lower borrowing costs and with more flexibility, and also generated cash of RMB56 million (US$9 million) with the divestiture of its non-core holding in New Zealand's Heartland Bank.
Business Highlights
Growth was driven by the Crop Protection, Nutrients and Merchandise segment, which increased revenue by 10% and operating income by 16% year-over-year. Additionally, the Seed and Grain segment increased revenue by 5% and operating income by 24% year-over-year. Rural Services revenue slightly decreased by 3% year-over-year while operating income increased 106% due to substantially better margins.
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