Agrogalaxy releases 2023 financial report and states worst agri-input moment is over

Agrogalaxy released its 2023 financial report, which revealed a loss of BRL334.5 million, reversing a profit of BRL53.9 million in the previous year, while revenue shrank by 18.9% to BRL9.3 billion. Meanwhile, the company’s Ebitda (Earnings Before Interest, Taxes, Depreciation, and Amortization) was 50% lower but remained positive at BRL342.2 million.

Facing challenges such as declining input and grain prices, combined with the effects of the El Niño weather phenomenon, the input distributor underwent a complete transformation in its business model and stated that the worst moment for inputs had already passed. According to Axel Labourt, CEO of Agrogalaxy, the effects of this ″reform″ should become clear in the consolidated balance sheet of 2024.

A strategy the company adopted was to improve margins by focusing on portfolio growth with better working capital returns, as well as improving price dispersion throughout the country. The company also focused on expense management through adopting a lighter and more flexible structure. Finally, it aimed to increase working capital. During the year, the company generated BRL83.5 million in cash through an extensive process of negotiating stocks with suppliers and producers.

One of the major problems faced by Agrogalaxy in 2023 was inventory, which began at BRL1.6 billion and gradually decreased throughout the year. A major disruption was the end of the company’s partnership with Bayer, which claimed that it needed to review the ″relevance and behavior of partners not only in favorable moments but also in more challenging ones.″ At the same time, Agrogalaxy increased its sales in the barter modality, for more direct negotiations with rural producers.

According to Labourt, the overall outlook is more positive, as the Brazilian Central Bank is already in the process of lowering interest rates. Agrogalaxy is now seeking ″alternative″ ways to finance itself and is preparing to launch an investment fund for fundraising. According to the input distributor, 2023 was a year of adjustment in agriculture, so banks were also more cautious and scrutinizing. The idea is to use this money to buy inputs in cash and negotiate better conditions with suppliers.

This year, Agrogalaxy said that it does not expect an increase in delinquency among its clients, following a 1% increase in 2023.

(Editing by Leonardo Gottems, reporter for AgroPages)