BayWa, the German multinational parent of the Cefetra grains and feed materials trading business, forecasts a positive second half for its agriculture division as society recovers from the Covid-19 pandemic.
BayWa’s Agriculture Segment reported an EBIT of €61.6 million on revenues of €5.6 billion for the first six months of 2020, compared to €53.6m and €5.7 billion a year earlier.
While supply chains “fundamentally stood the test” of Covid-19 and its control measures, the company’s international trade in grain and oilseeds was negatively affected by trading restrictions, particularly in southern Europe which suffered more than other regions from the pandemic. Global trading tensions – such as the trade dispute between the US and China – also impacted soyameal trading.
The dry spring in Germany and pressure on margins affected trade in fertilisers on the domestic market, while the group’s seed business saw a shift towards higher-margin product lines and catch crops.
BayWa believes demand for agricultural inputs will recover if farmers take advantage of historically low fertiliser prices. Post-Covid reductions in value added tax rates in some markets are an incentives to invest in agricultural equipment.
“In an environment strongly influenced by the coronavirus pandemic and by difficult macroeconomic conditions, BayWa fulfilled its basic supply function in the fields of agriculture, building materials and energy,” noted BayWa chief executive Klaus Josef Lutz. “An unusually strong second quarter more than made up for the typical seasonal decline in the first three months.”