Trigon Agri allayed fears of any turn to shareholders for capital, despite rising debts, following a series of deals and  an "exceptionally challenging year" for farming.

Joakim Helenius, the Black Sea farm operator's chairman, restated a target of over the next four years developing the company without issuing new shares, besides paying off debts and achieving a target of a 20% return on assets.

Although the group has voiced ambitious expansion plans, and undertaken acquisitions including the purchase of the Vaatsa dairy operation in Estonia, "we have managed our business with a close eye on liquidity management", which had enabled the group to avoid equity financing for nearly five years.

A Russian land swap last year - in which Trigon Agri swapped 81,000 hectares of land in Stavropol, in the south of the country, and Samara, in the centre for E2.5m in cash plus 71,000 hectares in the prime export area of Rostov – had been structured to cause only a "minor" impact on liquidity.

In financing the irrigation of the Rostov plot, which is sited close to a canal network, Trigon was working on a structure which would exploit government subsidies and external financial partners, rather than tap the group's own balance sheet.

'Sold more cereals than were produced'

The comments came as Trigon revealed that its net debt excluding grain inventories had risen by 31% to E53.2m as of the end of 2012, although the group stressed that it "has sufficient liquidity for the upcoming spring seeding and harvesting season".

Although the group's full year earnings before interest, tax, depreciation and amortisation (ebitda) rose by 39% to E19.5m, it was boosted one-time effects including an E18.1m profit booked on the land swapped in Russia, besides the sale of hefty crop stocks left over from 2011 at last year's elevated prices.

"In 2012 the group sold more cereals than it produced," with the harvest falling 20% last year to 221,000 tonnes, sapped by "severe drought and heat conditions" in Stavropol, and at the group's farms in the Ukrainian region of Nikolaev.

"The areas affected by the severe drought in 2012 constituted almost 40% of the total harvested area of the group.

"Due to this it was impossible for the group to achieve significant improvement in the cereals production segment financial results."

2013 prospects

Nonetheless, helped by the boost from the land sale, the group unveiled a 40% rise to E1.69m in earnings for 2012,  on revenues up 2.7% at E73.0m.

The group raised the hopes of better prospects for its 2013 crops, which include 17,000 hectares of winter wheat seeded on its newly-acquired land in Rostov.

"Autumn cultivations were completed on time and as at the date of the current report, land destined for spring cropping is in very good condition," Trigon said.

The group's shares, which are listed in Stockholm, closed 1.2% higher at SEK4.95.