Los Grobo in the Media
“It will always depend on the climate but assuming an average situation for agriculture and without any unfavorable climate event, added to the improvement of the company in financial terms and with the development plan we face, we have an optimistic vision for the next campaign that we estimate with a growth of 25%”.
This was defined by Jorge Arpi, CEO of Grupo Los Grobo, in dialogue with El Economista. The executive said that it is already possible to see that the fine harvest, of wheat and barley projected for December, "started with the right foot", so he expects a new "interesting" cycle, in contrast to previous cycles (especially those affected by drought) which he defined as "difficult" and "complex".
The agribusiness group, founded by the Grobocopatel family, is facing a necessary restructuring to improve its capitalization structure and debt profile. Months ago, the rating agency Fix revised its outlook from negative to stable, thanks to a capital injection of US $ 100 million from its controlling group - the Victoria Capital Partners fund, which owns 74% of the firm - , which managed to recompose the patrimonial situation.
Fix itself recently confirmed that rating, assuming that capital injection is considered a fundamental factor for the rating in view of the impairment evidenced between 2016 and 2017. “On March 29, 2019, 100% of the total amount of the increase was integrated. , with a net worth that represented 30% of the capital structure, ”he added:“ The company has managed to improve its debt profile after the syndicated loan obtained for US $ 44 million –ampliable at the company's option for up to US $ 70 million - which was mainly used to refinance short-term debt. Fix estimates that Los Grobo Agropecuaria managed to reduce its concentration of short-term debt to 34% of the total”.
For Arpi, “the capitalization reduced the amount of debt and extended it to longer terms so the financial stress was reduced. Today we have a more reasonable number”.
The consultant's report highlights the company's operational improvement in recent months. As of March 2019 (9 months), Ebitda (operating result before Amortization and Depreciation) was US $ 25 million against US $ 21 million reported in the same period of the previous year. “This improvement was achieved by the implementation of a cost reduction program. However, exchange rate losses continue to generate negative net results. In that month it was US $ 28 million”, he said.
With a five-year plan (2018-2022) the company seeks to double the turnover of grain origination as well as the turnover of the firm (reaching US $ 1 billion by 2022), based on actions such as adding around 16 new branches, of which six have already opened, in the last year (July 9, Belgrano, Tres Arroyos, Lincoln and Daireaux, in Buenos Aires, and Gualeguay in Entre Ríos).
In its latest balance presented to the CNV (National Securities Commission), the firm notes that the higher value of the exchange rate "generates benefits for the agro-industrial sector and the company in the development of its business." There, it accounts for the negative net final result for the nine-month period ended in March 2019, of $ 1,126 million, with a 49% gross margin increase, compared to the same period in the previous year. “The increase in financial results is mainly due to the result of the exchange difference due to the exposure of assets and liabilities, explained by the strong devaluation that the country has suffered. Part of this exposure arises as a consequence of the change in the financing structure with respect to the same period of the previous year, where the financial debt was structured in dollar currency and in the longer term (obtaining the syndicated loan and ON in long-term dollars), versus debt structure in pesos and at a shorter term of the previous period”, he clarifies.
In total, the company manages an agricultural production area that covers 188,000 hectares, of which 99,000 are owned. For Arpi, the next government, no matter what, should focus on "making life easier for those who generate foreign exchange." “We are cautious. We expect a good year but not an excellent one, especially because of the fall in the prices of products internationally, together with the retentions that generate a negative impact on the business”, he said.
Automatic translation from spanish.