DN Agrar recorded a 15% increase in the quantity of milk delivered in April 2023 compared to the same month last year. In the first four months of 2023, the Group delivered a larger quantity by 14% compared to the same period last year, according to a report by the Analysis Department of Tradeville.
DN Agrar operates in the agricultural sector, and its revenues predominantly come from the production and sale of raw milk. The company owns a herd of over 11,000 dairy cows and young cattle. DN Agrar is the market leader in Romania in the production of raw cow’s milk, with an annual production of approximately 50 million liters. The Group comprises four major farms: Prodlact (dairy cattle breeding), Cut, Lacto Agrar, and Apold (cow’s milk production). The company’s main client for the collected milk is Lactalis (Albalact, Covalact, Dorna Lactate, etc.), one of the largest milk processors globally.
The company also engages in secondary activities such as cereal and fodder production, with crops occupying around 7,200 hectares. Additionally, in 2023, the company will complete an investment in a compost factory within the Apold farm, thus paying special attention to circular agriculture.
As of December 31, 2022, the company was controlled by AM Advies BV (with 74.09% of voting rights), which is 100% owned by Beheermaatschappij De Boer Koekange B.V., a company whose ultimate beneficiary is Jan G. de Boer, the founder and CEO of DN Agrar. The remaining 25.91% belongs to individual and legal shareholders, representing the company’s free float.
Milk imports have increased exponentially in the last 30 years
Milk imports in Romania have increased more than 25 times in the last 30 years, primarily due to a decrease in the national dairy cattle population, fragmentation of milk-producing farms, and the preferences of international retailers (IKA) to work with fewer suppliers. From 2015 to 2022, per capita milk consumption increased on average by 9%. The annual production in Romania amounts to approximately 4.2 million tons, with a much lower animal yield than other important countries in the European Union (less than half the EU average and three times lower than leading countries).
Therefore, the underdevelopment of the zootechnical sector in Romania leads to an inefficient milk production process and results in an expensive product, which prompts processors to turn to milk produced in neighboring countries such as Hungary (annual imports of over 65 million euros) or Poland (annual imports of over 11.7 million euros). An eventual increase in the competitiveness of Romanian farmers would allow a significant portion of these sums to remain in Romania.
Quantity of milk delivered by DN Agrar – on the rise
The quantity of milk delivered during April 2023 recorded an increase of over 15% compared to the same period in 2022. In this regard, during the first four months of 2023, DN Agrar farms delivered a quantity approximately 14% higher than the first four months of 2022 and 25% higher than the mentioned period in 2021.
At the national level, during the first two months of the current year, the collected quantity of cow’s milk increased by 12.5% compared to the same period last year, while the quantity of raw milk imported by processing units decreased by 36.8%.
Opportunities / Risks
- Replacing large quantities of imported milk from neighboring countries with milk produced in farms in Romania.
- Romania has the most fragmented agricultural and zootechnical sector in Europe, which offers DN Agrar the opportunity to acquire small farms and integrate them into the group.
- Involvement of DN Agrar’s CEO and founder, Jan G. de Boer, a professional with international experience in the zootechnical field, in the operational activities.
- The disadvantage of competing with large farms in Hungary and Poland, which benefit from higher subsidies and more transparent policies from the governments of the two countries.
- The company operates in a competitive market and is exposed to price fluctuations, which have been decreasing recently from the peak reached in 2022. This risk is partially offset by the favorable contracts the company has with its customers and its bargaining power as the largest producer of raw cow’s milk in Romania.
On June 12, DN Agrar (DN) invites its shareholders and all those interested in the group’s business to its farms in Alba County, one of the most beautiful geographical regions of Romania. It is the first “Investor Day” event organized by the company since its listing on the stock exchange. The experience will be unique, so we will be there too, ready to listen, ask questions, and see the Apold and Cut farms from a different perspective than just through pictures.
The sources mentioned by TradeVille in this report are BVB (Bucharest Stock Exchange), company reports and announcements, HotNews, INS (National Institute of Statistics).
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Source of the original article: www.bursa.ro