Norofert: Turnover of 13.1 million lei and net profit of 1.65 million lei in Q1 2023

29 May 2023

Bucharest, May 29, 2023 – Norofert SA (BVB Symbol: NRF), the main producer of organic inputs in Romania and an experienced player on the agricultural market, reports a turnover of 13.1 million lei in the first quarter of 2023, and a net profit of 1.65 million lei at the consolidated level, in a slight decrease compared to the same period of the previous year against the background of the difficult context in agriculture.

Thus, consolidated turnover decreased by 19.27% compared to the same period in 2022 due to the fact that, compared to last year, in the first quarter of this year, the company chose not to trade organic grains due to volatility and, in some places, the blockage of the organic grain market, with farmers expecting higher prices, after the massive declines in recent months for all grain prices, organic or conventional. The company has adopted a prudent lending policy that it considers to be a winner this year, with the spread of risk across a larger customer base designed to manage the period of volatility in the coming months.

“We are in a period of transition between high prices of inputs, fertilizers and pesticides, and cereals and their normalization, gradually returning to the level of 2021. The difficulty of 2023 comes precisely from this transition: when the autumn crops were established in 2022, these were done with very high prices for fertilizers, urea, ammonium nitrate, NPK, and with the prospect of grain prices making these investments profitable. Unfortunately, starting from November 2022, grain prices experienced an accelerated decline, reaching today even half compared to summer-autumn 2022. However, it remains to be seen what will be the evolution of the grain market in the coming months, but the sentiment in the market is pessimistic in in connection with an improvement, especially when, in relation to the cheap cereals from Ukraine, a conclusion has not yet been reached that would protect Romanian farmers”, said Vlad Popescu, President of the Norofert SA Board of Directors

The company’s cash position saw a 110.58% increase compared to Q1 2022, which proves that in a difficult period in agribusiness with low liquidity, the cash position is a safety net and evidence of good receivables management .

The consolidated net result experienced a decrease of 12.11% compared to Q1 2022, which occurred as a result of the non-trading of grains. In the field in which the company operates, in general, the first quarter of the year is a period of high expenses and low profitability.

In our opinion, in a year that calls for caution, it is more responsible not to over-credit, although in the market demand for our products is growing, and to avoid trading, which brings additional risk due to the volatility of this market in the reported period. However, if we refer to the core business, the production of fertilizers and bioprotection, the gross margin increased from 16.37% to 25.11%”, added Vlad Popescu.

The company believes that the year 2023 will be comparable to the previous one in terms of the level of economic unpredictability. In agriculture, there are still price drops for the main crops, wheat, corn, sunflower, rapeseed, in the context of massive imports of cheap grains from Ukraine, which puts massive pressure on the price of domestic grains . Moreover, the financial situation of Romanian farms deteriorated in the last quarter of 2022 and this could persist in 2023 as well, if measures are not taken to protect crops of domestic origin against the low price of imported ones.

As for the investment activity, for the year 2023 they are channeled in three major directions, improvements in the liquid production flow through additional automation and increases in production capacities for special products based on microorganisms, completion of the research laboratory and multiplication of bacteria in in view of the development of new products as well as the implementation of an irrigation system at the farm in Zimnicea. The total cost of the investments amounts to 850,000 euros, the financing for which will be provided through a mix of own funds and bank loans.

In 2023, Norofert aims, at a consolidated level, for a turnover of 82.5 million lei, EBITDA of 17.92 million lei and a net profit of 10.8 million lei. The revenue and expenditure budget for 2023 was approved by the annual Ordinary General Meeting of shareholders, held on April 21, 2023. The consolidated results of the group include the results of the parent company Norofert SA and the subsidiary Agroprod CEV SRL, 100% owned , which operates an organic farm of 1000 ha in Zimnicea, Teleorman county.

Norofert Group shares are listed on the AeRO market of the Bucharest Stock Exchange starting on March 3, 2020 and are traded under the symbol NRF. The company currently has a market capitalization of over 111 million lei. Starting from October 11, 2021, NRF shares are included in the BET-AeRO index developed by BVB.



About Norofert SA

 Norofert SA is the main producer of organic inputs and an experienced player on the agricultural market in Romania. Norofert operates on three main lines of business: research and production of inputs for organic agriculture, organic farming and grain trading. Norofert’s philosophy is to be with the partner farmers throughout the plant cycle, from the provision of ecological inputs, to the monitoring of the crops and to the taking over of the grain at harvest from the farmer to be exported to the final processors, with whom contracts are concluded preset trading.