Agrokultura shares accelerated their late-year recovery after
the former Soviet Union farm operator claimed a "significant success" by agreeing
the sale of its Kaliningrad operations, in a deal which will present a cash
injection of more than $15m.
The group, which is listed in Stockholm but farms in Russia
and Ukraine, said that it had would gain a "total cash inflow… in excess of
SEK100m ($15.2m)" from the disposal of its 14,300-hectare Kaliningrad business.
The deal crystalizes a loss of SEK3m on the operations,
which were gained through the 2010 all-share purchase of BBAH Sweden.
However, with most of this loss identified at the time of
the deal, due to asset revaluations, Agrokultura instead highlighted instead the
sale at a price close to book value, and above the level implied by the group's
"The divestment of the cluster in Kaliningrad is a
significant success for the business at a price significantly in excess of the
attributed value according to the company's share price and close to book
value," said Stephen Pickup, the Agrokultura managing director.
He added that the cash gained from the deal would be invested
in the group's other operations, based in a landbank covering a further 212,000
hectares in Russ and western Ukraine.
In terms of cropped acreage, which reached 126,800 hectares
at this year's harvest, the loss of the Kaliningrad area "will be made up
largely through a modest increase in planting in the [black earth region]
operation in Russia.
Agrokultura shares stood soared 14% in early deals in
Stockholm before easing back to SEK3.02 as of 11:30 local time (10.30 UK time),
still up 7.9% on the day, and up 35% from an early December low.
Hopes vs experience
Agrokultura said at the time of the BBAH purchase that it
expected the "operations in Kaliningrad to create substantial shareholder value.
"Adding BBAH's high-yielding farmland in Kaliningrad close
to export facilities is an important step in [Agrokultura's] efforts to improve
overall yields and decrease the reliance on the volatile domestic Russian grain
However, the business has delivered yields below those of Agrokultura's
other operations – albeit that the black earth region result is swollen by
sugar beet results.
Last year, Kaliningrad took 2.6 tonnes per hectare, compared
with 2.8 tonnes per hectare in the black earth region division, and 3.8 tonnes
per hectare in Ukraine.
This year, the Kaliningrad unit achieved 2.9 tonnes per
hectare, compared with 3.6 tonnes per hectare in the black earth region and 3.5
tonnes per hectare in Ukraine.
Land grab reversal
Agrokultura added that Monday's disposal was "consistent
with the company's long-term strategy to divest non-core holdings and create a
more consolidated and controlled operation to drive cost reduction efforts".
The group is, in a reversal of the land grab drive which it
and many peers undertook late in the last decade, rationalising its portfolio
in an effort to focus on the most profitable plots.