Norofert SA (BVB Symbol: NRF), the main producer of organic inputs in Romania and an experienced player in the agricultural market, reports strong business growth compared to the previous year due to the development of the business lines in the portfolio. In this regard, the operating income of the group reached 77.35 million lei in 2022, an increase of 58% compared to the same period in 2021.
The consolidated turnover reached 70.68 million lei, up 36% compared to 2021, of which Norofert SA, on an individual level, has a turnover of 67.71 million lei. The net result registered an increase of 49% compared to 2021 reaching 10.56 million lei, thanks to a better presence in the market, significantly higher sales of solid and liquid inputs, the Norofert core business having the greatest influence on growth, unlike the year 2021.
“We are proud of the investments we made in 2022, the first M&A – a 1,000-ha farm and the purchase of the building where the Filipestii de Padure factory operates. 2022 was the first full year of activity at the Zimnicea farm and the two agricultural campaigns brought us results beyond expectations, with harvests above the area average. I believe that with the acquisition of Agroprod CEV SRL, Norofert has demonstrated that it can carry out M&A transactions efficiently and profitably. In addition, the commissioning of the soil fertilizer line in record time, after delivery delays, allowed us to start production to fulfill orders from the autumn campaign and the 2023 presales campaign. Also, the acquisition of the land and the factory from Filipestii de Padure will allow us additional investments starting this year, and on the 10,000 square meters of land we have free we have the possibility to scale production and storage. Moreover, the figures show that the gross margin has improved, once again exceeding 20%. This is a fundamental indicator for us because it shows us, especially in a difficult year, that we can stay above inflation and be profitable even in adverse conditions. The cashflow we have strived to improve through the use of banking products such as factoring and discounting has allowed us to purchase large volumes of raw material and invest in improvements to production flows, both of which bring savings in the cost of our products,” said Vlad Popescu, President of the Board of Directors.
In 2022, the costs of materials increased by approximately 18 million lei, by +s75% compared to the same period in 2021, due to the increase in sales of liquid and solid inputs produced. It is also worth mentioning that all costs of raw materials and their transport increased during 2022, due to the disruption of logistics flows caused by the war in Ukraine and inflationary pressure in the market.
Personnel expenses stagnated at the level of 2021, compared to the sales increases that Norofert had in 2021. This fact was also due to outsourcing the sales and brokerage process, especially for areas of the country where the coverage of the own sales force was insufficient. The cash flow of the company saw an improvement over 2021 and a very big difference compared to 2020, due to the positive cash flow that characterized the year 2022. Factoring, BO discounts and sales of solid fertilizers with advance payment brought cash to the company, which was used to finance investments.
On a market for phytosanitary products and organic fertilizers valued at 10-12 million euros, Norofert has an approximate market share of 30%, estimated by reporting the number of hectares of organic crops for which Norofert sales covered the phytosanitary/organic fertilizer requirement to the total number of hectares of agricultural crops on which ecological inputs are applied. According to the expectations of the Norofert management, considering the fact that, at present, phytosanitary products and foliar fertilizers are sold almost exclusively on this market, the increase in the production capacity and sale of organic soil fertilizers will contribute to the consolidation and amplification of the competitive position.
The company’s management proposes to change the dividend policy by adding a cash dividend with an annual increase, the initial proposal for the first dividend being 1.2 million lei gross. The company’s management considers this dividend policy to be an important proof of the company’s responsibility, the amount of the dividend being a conservative and sustainable one for a developing company. The new proposal for the distribution of the dividend will be subject to the approval of the company’s shareholders during the Annual General Meeting, which will take place on April 21, 2023, and the payment of the dividend is estimated for the months of October-November 2023.
Although the outlook for 2023 does not look very optimistic due to pressure on grain prices from Ukraine’s massive export, political instability and climate risk, the company’s management remains confident that agriculture will once again show resilience, as it has and in 2022. However, the growth philosophy for 2023 will be one of consolidation, non-risk-taking and stability in terms of market trajectory. The large investments completed in 2022 helped strengthen the company’s position and laid the foundations for healthy growth in the coming years, and the continuation of investments still underway confirms the company’s desire for growth.