Russia-based Don Agro says operations face minimal impact from current events

DON Agro International said its operations have been materially unaffected by the current events in Russia and Ukraine, with minimal disruption to its supply and demand chain.

In a press statement on Wednesday (Mar 2), the Russian agri and dairy group explained this was because its crops and milk are sold directly to traders who purchase and collect commodities from its facilities in Russia.

All raw materials necessary for the production continue to be available as usual, with the majority of raw material for the spring agricultural works already purchased and delivered to Don Agro's warehouses.

The group also expects a significant increase in selling prices of agricultural produce, which will allow it to increase its cash and cash equivalents notwithstanding depreciation of the Russian rouble.

Don Agro's management however believes the group may face challenges in raising significant long-term borrowings in the future, which could potentially reduce the volume of investments for the purpose of expansion.

It emphasised that none of the group and its subsidiaries or associated companies - nor its shareholders or management members - are listed on the global sanction lists or have been engaged in any sanctioned activities.

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While its subsidiaries are dealing with sanctioned entities listed in US and EU sanctions lists, Don Agro maintains that such deals remain in line with its sanctions compliance policy.

Separately on the same day, the group posted SS$5.6 million in net profit for the H2 ended Dec 31, 2021, representing a 29.4 per cent increase from its net profit of S$4.3 million the year before.

This was mainly due to a S$2.6 million gain on bargain purchase, which resulted from excess net assets acquired compared to the consideration paid for the acquisition of a subsidiary.

Revenue for the half year fell 10.6 per cent to S$21.5 million from S$24.1 million in H2 FY2020 due to lower income from the sale of crop production.

The latest set of results brings Don Agro's H2 earnings per share to S$0.037 compared to S$0.0286.

Its net profit for the full year was up 18.4 per cent to S$10.3 million compared to S$8.7 million in FY2020, despite a 0.3 per cent dip in revenue to S$30.9 million.

While the group said it remains strategically unaffected by the current geopolitical situation between Russia and Ukraine, it noted that sanctions imposed by the US and the EU, among others, since 2014 have led to increased economic uncertainty.

This continues to be further exacerbated by the Covid-19 pandemic, it added.

Don Agro said it expects a higher margin going forward due to growth in average milk prices and significantly higher world prices of agricultural produce.

Its board did not recommend a final dividend for FY2021, citing a need to support liquidity in view of the current situation.

Shares of Don Agro ended Tuesday S$0.03 or 8.8 per cent lower at S$0.31.