Strategic Goals

Akola Group’s strategy is centered on profitable and sustainable growth, continually advancing all core activities, and leveraging synergies across diverse areas of operation.

Main numerical goals

Target Long term objective 2021 / 2022 2022 / 2023
Operational efficiency Operating profit margin >/=3% 5.47% 2.07%
Optimal return on capital Return on capital employed (ROCE) >/=12% 18.97% 7.03%
Sustainable debt level RMI adjusted Net financial debt / EBITDA </= 4.0 1.90 4.18
Target level of EBITDA EBITDA >/= 70,000 – 90,000 thousand EUR 132,173 67,318
Creating shareholder value Dividends paid within the financial year to a net profit of the previous financial year >/= 20 % 6.00% 0.0%

Strategic Diversification in Activities

We strategically diversify our activities to maximize the company’s long-term value, focusing on activities that create more value.

Revenue split (Percentages do not add up to 100 due to activity between segments)

A long-term perspective

2021/2022

2022/2023

Grain, Oilseeds and Feed

Agricultural Production

Other Activities

Products and Services for Farmers

Food Products

Segments Goals

By carrying out activities in each of the five main operating segments, the Group sets separate targets to achieve the objectives applicable to respective segments.

Partners for Farmers

The objective of the Group’s management is to sustainably export grain from the Baltic States in order to achieve higher profitability in this activity. When assessing achievements in the grain trade the following is considered: the ratio of the volume of grain purchased in the Group’s elevators to the volume of harvest in the region (target: >/= 7 percent), segment’s operating profit margin (target: >/= 1.5 percent), etc.

The key task in this segment is to grow profitably, while ensuring acceptable earnings for the farmer. Also, to look for and offer to the market solutions that help plants adapt to changing climatic conditions. To have one of the best agricultural machinery servicing networks in the Baltic States. To develop the investment in GeoFace and offer modern solutions to farmers with smart technologies. When assessing achievements in the segment, the following is considered: the market share of new tractors and combines (target: TOP 3 position in each country of operation), segment’s operating profit margin (target: >/= 5 percent), etc.

Farming

The development of this area of activity is limited by the area of managed land, therefore, the respective strategic objectives of the Group are to further increase the productivity of crop and dairy farms and to expand the volume of raw milk production through the modernization of production processes and cow herd expansion. When assessing achievements in the segment, the following is taken into account: milk yield (target: >/=12 thousand kg of milk per year per cow), yields of various cereals (winter wheat average yield target: >/=7.2 tons per hectare of crop, EBITDA gained per one hectare planted (target: >/= EUR 300), etc.

Food Production

The objective of the management of the Group is the efficient management of the companies in the segment and further development of poultry farming capacities through the modernization and automation of packaging, refrigeration, and logistics solutions, as well as reduction of gas consumption in poultry farming facilities. When assessing achievements in the segment, the following is taken into account: brand awareness regarding the brands represented (target: to remain No. 1 in the Latvian & Lithuanian market), poultry farming without usage of antibiotics (target: 100% raised antibiotic-free), operating profit margin (target: >/= 3.5 percent), etc.

The objective of the management of the Group in the segment of grain-based food is to maintain leadership of branded products in the Baltic states, expand and capitalize on private label production for export. The emphasis for the upcoming year goes to implementation of the investment and expansion projects which will further increase the earning capacity of the segment. A special interest will be designated towards acquisitions in the sector with wider scope than Baltics. When assessing achievements of the segment special attention is being brought to operating margin (target: >/= 4 percent).

Other Products and Services

The businesses in this segment are not significant in the context of the Group, and consequently, due to their small size, their profitability is often lower than that of competitors. The Group’s management’s objective is to find a competitive advantage (e.g., expanding production of higher margin premium products, increasing brand awareness, maintaining, and expanding supplier representation contracts, and achieving the right scale, ensuring an efficient result from the activities.

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Sustainability at Akola Group