As of the end of 2014, Razgulyai Group improved some performance results despite the economic difficulties

In 2014 Razguliay Group worked in most difficult conditions related to the overall economic situation in the country, lack of working capital financing and the period of waiting for Vnesheconombank, the principal creditor, to take a decision on the debt restructuring program for over three years. The most serious negative consequence of these factors was that the Group was forced to take a decision on suspending operations of three of the 10 sugar refineries and one rice factory as well as reducing the arable land area.

However, due to the efforts made, the Group managed not only to keep the key performance figures at the level of 2013 but also to raise the performance effectiveness improving financial results.

The total profit from sales, one of the key financial results of the Holding, grew in 2014 by 59% compared to 2013 and amounted to RUR 3 979 billion *, and the return on sales amounted to 27%, which is 1.6 times more than this figure.

Despite reducing the arable land area, winter wheat sales amounted to 218 thous. tonnes, which is almost the same as in 2013 (228.8 thous. tonnes), while barley sales grew by 27% compared to 2013 and amounted to 112.2 thous. tonnes.

The Group was able to maintain a leading position in the sugar refining segment. Production of sugar by enterprises of the Group in 2014 totaled 317 thous. tonnes, which is only 3% less than in 2013, while sugar recovery during the year increased from 13% to 14.8% and sugar loss in production decreased from 2.7% down to 2.6%, which is one of the lowest figures among the leading sugar producers in Russia. Sugar sales in 2014 remained at the level of 2013 and amounted to 302 thous. tonnes.

Rice production in 2014 decreased down to 62 thous. tonnes due to forced shutdown of one of the enterprises, while in 2013 this figure was 99.6 thous. tonnes.

At the end of March, 2015, Razgulyai Group launched the spring sowing campaign. This year it is planned to allocate over 252 thous. hectares of arable land for crops. The area allocated for winter wheat and spring wheat this season increased from 52 thous. hectares up to 75 thous. hectares; the area for sugar beet and rice remained the same as last year: over 50 thous. hectares for sugar beet and about 14 thous. hectares for rice. 31 thous. hectares will be allocated for oil-producing crop, 28 thous. hectares for barley and about 10 thous. hectares will be used for corn for grain. In addition, the fields of the agricultural holding will be sown with oats, sinapis, white lupin, corn for silage, as well as various species of annual and perennial grasses. Currently, approximately 70% of the spring sowing campaign was completed, over 100 thous. hectares was sown.

On May 7, 2015, Vnesheconombank notified the Group of the positive decision on setting a credit limit for enterprises of Razguliay Group to finance the 2015 sowing campaign and preparation of processing enterprises of Razguliay Group for the 2015 processing season. However, taking into account the conditions specified based on the limit, under which the loan proceeds are disbursed, the Group will be able to use the loan proceeds not earlier than in 2.5 months, when the sowing campaign is completed. Thus, the funds can only be used for partial financing of preparation of processing enterprises of Razguliay Group for the 2015 processing season.

“Conducting the sowing campaign under the liquidity shortage conditions makes us buy the cheapest seeds of grain crop, sugar beet, soybeans and corn, as well as refrain from using imported high performance crop protection chemicals and minimize the amount of fertilizers added, which, in turn, can adversely affect the crop yield of the Group this year,” said Elena Lazarenko, General Director.