KTG Agrar revealed a 31% rise in profits for the first half of the year, and forecast a "further leap" in profits for the second, as it milks a strategy of delaying crop sales which "will definitely pay off".

The Hamburg-based group, which operates farms in Germany and Lithuania, said that operating profits for the January-to-June half rose to E8.2m, from E6.3m a year before, despite a strategy of holding back on crop sales in expectation of higher prices.

KTG's food business, swollen by last year's takeover of Frenzel Tiefhuehlkost, and the biogas business KTG Energie, which was floated in June, "were the main growth drivers in the first six months of the year", the company said.

Indeed, a rise in revenues of 15.7% to E31.3m came despite a halving to E4.8m in takings from farming.

'Clearly proven to be right'

However, delaying crop sales had primed the company for a strong contribution from the farming division too in the current, July-to-December period.

"In the second half of the year, the sale of the good harvest at very good prices will lead to a further leap in profits," Siegfried Hofreiter, the KTG Agrar chief executive, said.

Ulf Hammerich, the head of the KTG farming division, said that "in view of the trend in wheat, maize and other commodity prices", a strategy of holding back on sales "has clearly proven to be right and will definitely pay off in the second half of the year".

Analysts in fact expect the group to report a 10% drop to E16.1m in operating profits for the full year, despite expectations of a 35% jump to E102.3m in revenues, according to a ThomsonReuters poll.

Earnings, excluding one-off items, are seen tumbling 30% to E4.31m.

Investment plans

The group said that its "dynamic" start to 2012 had highlighted that its "huge investments over the past years are increasingly paying off".

And it forecast further investments, with plans to expand its landbank to 40,000 hectares, from the current 35,700 hectares, of which KTG owns 8,100 hectares.

Furthermore, its food division is targeting a doubling in revenues, although a timescale was not given, while KTG Energie, which on Tuesday unveiled the takeover of rival Deutsche Biogas, is set to achieve 60 megawatts in electricity generation capacity by 2015.

KTG Agrar shares closed 1.6% lower at E15.08 in Frankfurt.