BayWa, the German multinational trading and services group that includes the Cefetra grain and feed materials business, has posted increased earnings and revenues for 2018.
The group made an EBIT of €172.4 million on sales of €16.6 billion in calendar 2018, compared to €171.3m and €16.1bn in 2017. There was growth across all of its Agriculture, Energy and Building Services divisions.
BayWa’s Agriculture segment reported an EBIT of €100.1m on revenues of €11.0bn, up from the €82.1m and €10.8bn in the year before.
Within the segment, the BayWa Agri Supply & Trade (BAST) business unit benefited from the dry weather in Europe driving demand for additional feed, at a time when feed material markets were volatile due to the US: China trade dispute. Its Dutch operation Cefetra BV was able to meet rising demand for soya, as Brazil origins replaced US beans after China levied import duties on US soya.
At the same time, Cefetra’s existing trading contracts and inventories allowed it to maintain its positions as wheat prices rose rapidly from May 2018 as the hot, dry weather reduced harvest yield potential and production volumes in Europe.
Conversely, the Agri Trade & Service business unit and its grain trade, agricultural input and recording activities were adversely affected by the extremely dry weather during the year. Particularly in Germany and Austria, there was a significant decline in grain volumes to market; logistical challenges with low water levels affecting river transport; and a reduction in fertiliser applications as crops and grassland dried up. The division was also affected by sharp rises in low-water surcharges and a lack of crop drying income.
BayWa chief executive Klaus Josef Lutz anticipates further growth as the group consolidates its international agricultural trade acquisitions over recent years. He expects a recovery of grain trade earnings assuming average weather and crop development in 2019, while feed material demand will remain high as on-farm stocks remain low after the 2018 shortage.
“The Agriculture Segment improved above all thanks to extremely positive development in international trading and agricultural equipment business,” says Mr Lutz.
BayWa continues to invest in digital farming and eBusiness platforms through its cross-group Innovation & Digitalisation Segment. While 2018 revenues rose to €10.7m (€6.9m), R&D expenditure meant an EBIT loss of €12.3m (-€10.8m).
The digital agriculture and NEXT Farming OFFICE software packages help farmers optimise fertiliser volumes and meet stricter recording obligations under German law. The group notes that 49% of revenues came from software licences and maintenance contracts, with 34% from digital mapping and soil sampling.
The Group’s Agricultural Equipment business unit set a new record for earnings in 2018, largely through new tractor sales, which also lifted servicing and spare part sales.