Shares in FirstFarms tumbled after the eastern European farm operator unveiled a return to the red, despite a better-than-expected start to the group's entry into pig production.
The Copenhagen-listed group, which operates in Hungary, Romania and Slovakia, reported a loss of DKK2.14m for the April-to-June period - following on from earnings of DKK4.45m in the first three months of the year, FirstFarms' first quarter in the black in two years.
The loss in the latest quarter, which compared with a loss of DKK243,000 a year before, came despite a more than doubling in turnover, to DKK33.8m, boosted by the group's acquisition of Dan-Farm Holding, which controls a 2,200-sow pork operation in Hungary.
Indeed, the pig business "has contributed a higher operating profit than recognised in FirstFarms' budget", the group said.
However, FirstFarms added that while milk production at its Slovakian dairy operation had met forecasts, prices had not enjoyed quite the recovery that it had pencilled in.
"The milk price has been a little lower than expected," the group said, if adding that values were "significantly higher than last year".
Slovakian milk prices rose 29% year on year to average E29.99 per 100 kilogrammes in June, according to European Commission data, which puts at 36% the average rate of increase in eastern Europe, as measured by the so-called EU-15 countries.
Furthermore, FirstFarms reported lower-than-expected yields from winter crops, "due to a dry spring period, especially in Slovakia".
The commission's Mars agricultural meteorology division last week, flagging "lack of rainfall and consequent dry soils" limiting crop growth in parts of Austria, the Czech Republic and Slovakia, pegged Slovakia's average wheat yield at 4.99 tonnes per hectare, a drop of 16% year on year.
"Also, lower harvest yields are expected for the spring crops," FirstFarms said.
Mars forecasts the Slovakian corn yield this year tumbling by 26% to 6.28 tonnes per hectare,
FirstFarms stood by its forecast for full year operating profits of Dkk18m-22m.
Nonetheless, its shares fell 5.0% to DKK66.00 in afternoon deals.
By Mike Verdin