Ekotechnika boosts half-year sales to EUR 70 million

• Strong increase in sales in the traditionally weaker first half-year (1 October 2012 - 31 March 2013)
• Earnings before interest and taxes (EBIT) of EUR 2.9 million (+22%)
• Negative net result due to seasonal inventory build-up

Walldorf, 27 June 2013 – Ekotechnika GmbH, the German holding company of Russia’s largest dealer of international agricultural machinery, the Ekoniva-Technika Group, increased its sales revenues significantly in the first six months of 2012/13 (31 March). Revenues climbed by 46% to EUR 69.8 million. Reasons for the sharp rise in sales included better market penetration in the sales territory as well as good operating conditions thanks to persistently high prices for agricultural products. The sale of agricultural machinery accounted for approximately 85% of the total revenues. Revenues of approx. EUR 8.6 million were generated from the sale of spare parts, while the Service and Other Revenues segment contributed about EUR 2.1 million. The 50% increase in service revenues reflects the growing importance of this business segment, which is characterised by high margins.

At EUR 2.9 million, the Group’s earnings before interest and taxes (EBIT) were up by 22% on the prior year period. Due to seasonal factors, the net result for the first six months remained negative at EUR -4.6 million (previous year: EUR 0.6 million). The moderately positive result of the previous year is primarily attributable to exchange rate effects. In the Russian agricultural machinery trading sector, the period from October to March is characterised by a build-up of inventories for weather-related reasons. These inventories are then sold in the second half of the fiscal year starting April. This year, business picked up later than usually due to the long winter. In spite of the negative net result the operating cash flow was clearly positive at EUR 16.6 million as of the reporting date.

Says Wolfgang Bläsi, Managing Director of Ekotechnika GmbH: “The framework conditions for the agricultural machinery business in Russia will remain positive. The EUR 60 million bond issue in April has optimised our financing structure and helps us accelerate our growth through the opening of new locations and the expansion of our spare parts and service activities. “

The ongoing modernisation of Russia’s agricultural sector and the relatively high producer prices and, hence, farmers’ higher incomes will continue to be the main growth drivers for Ekotechnika this year. The company primarily sells products of the John Deere brand, the world’s No. 1 in agricultural machinery, which has only recently announced a record result for the second quarter (30 April). The US world market leader accounted for approximately 60% of Ekotechnika’s 2012/2013 half-year sales.

The German Engineering Federation (VDMA) expects the global output of agricultural machinery to increase by 6% to EUR 96 billion in 2013. Being the largest territorial state in the world, Russia is considered by international manufacturers to be one of the markets with the greatest potential.