Correction to the EBITDA guidance of AUGA group, AB for 2024

    Correction to the EBITDA guidance of AUGA group, AB for 2024

For the sake of transparency and keeping investors duly informed regarding the predicted financial results for 2024, on 7 December 2023, AUGA group, AB, and its subsidiaries (hereinafter – the Group) published preliminary EBITDA guidance for 2024 along with the key assumptions used to forecast gross profit by segment and the Group's overall EBITDA figure.

Given that the first half of 2024 has now passed and that the Group has published actual financial results for that period and notes the trends in the financial results for July and August 2024, updated EBITDA guidance for 2024 is now being published together with the underlying assumptions:

		Former guidance of 12/07/2023, EUR, million	Corrected guidance, EUR, million
1	Crop growing gross profit	14.7	2.6
2	Dairy gross profit	2.0	2.0
3	Mushroom growing gross profit	2.2	2.2
4	FMCG gross profit	0.5	0.5
5	Biomethane gross profit	2.0	0.0
6	Depreciation	13.8	14.6
7	OPEX	-12.0	-10.4
	Est. EBITDA 2024	23.3	11.5

The EBITDA guidance for dairy, mushroom growing, and FMCG segments published in 7 December 2023, is relevant and unchanged.

"The 2024 EBITDA guidance for the more predictable segments, such as dairy, mushroom growing, and FMCG segments, remains relevant. The biggest change is in the crop growing segment due to a smaller-than-expected harvest, higher production costs, and lower raw product prices. Additionally, the Group's new activity of biomethane production has faced challenges due to uncertainty in the green certificate market in Germany. Thus, we are downgrading the result of forecast for this segment until there is more clarity in the market. On the other hand, due to the successful implementation of efficiency and cost-reduction programmes, the Group's operating costs are expected to be cut down by an additional EUR 1.6 million more than planned.

Already at the start of this year, we also announced a review of the efficiency of our economic units, which significantly impact the results of the crop growing segment. Based on those assessments, we decided to reduce the number of unprofitable agricultural land areas. Thus they will no longer negatively affect next year's results and the need for working capital will be less," says Kęstutis Juščius, Chair of the Board of AUGA group, AB.

Explanations are given below for the segments where the forecasted 2024 gross profit differs from the guidance announced on 7 December 2023.

Reasons for the changes in the gross profit forecast for the crop growing segment:

1. In 2024, the Group increased the area in which it undertakes conventional farming to 17,980 ha (2,480 ha more than was planned in 2023) with the aim of improving the efficiency of the agricultural land it cultivates and to ensure a sufficient supply of conventional feed for conventional livestock farms. The Group also reduced activities on non-productive land, consisting of an additional 432 ha across various locations. On the remaining 19,780 ha, the Group undertakes organic farming.
2. The Group’s data shows that the yield in 2024 will be lower than was forecast in the initial EBITDA guidance, with an impact of about minus EUR 4 million. The biggest negative factor was the smaller-than-expected conventional rapeseed harvest, which fell from the level of 3.5 t/ha planned in 2023 to a revised 2.4 t/ha. The wheat yield in 2024 is close to the projected figure, while the yields of other crops will be clearer after the third quarter of 2024 when the harvest is complete.
3. In 2024, due to changes in its model of agricultural operations, the Group incurred bigger production costs than planned. Production costs were higher mainly in conventional farming activities due to specifics of the transition to conventional operations, which required more intensive soil cultivation. The impact on the segment’s gross profit amounted to a negative EUR 4 million.
4. In 2024, the Group received lower subsidies than planned in 2023 due to an increase in the area of land shifted to conventional farming and a 15% limitation on organic and organic scheme payments introduced in April 2024. Total subsidies of EUR 11.2 million are planned in 2024 (EUR 13.4 million were planned on 7 December 2023).
5. In 2024, raw products have been sold and prices have been contractually agreed throughout the year. Lower-than-expected raw product prices in 2024 will have a negative EUR 1.6 million impact on the crop growing segment’s results.

In 2024, the Group conducted a review of the economic units in its agricultural operations. As a result, the Group decided as of 30 September 2024 to discontinue operations in the Mažeikiai region where 3,300 ha were cultivated.
In this region in 2024 the generated loss amounted to about EUR 2 million. The Group is of the view that the smaller area of land under cultivation will not only improve overall results but also reduce the need for working capital.

Other changes to the 2024 EBITDA guidance:

• Biomethane: In the EBITDA guidance published on 7 December, 2023, the Group planned to operate its biomethane plants at two-thirds capacity. Although the Group has reached one-third capacity, contracts for the sale of production made in the spring have been temporarily halted due to uncertainty in the green certificate market and the liquidity situation of the client purchasing gas for the German market. While the Group's cash flow from this activity remains positive, the gross profit forecast for 2024 has been reduced to zero pending clarification of the situation in the market.
• Depreciation costs: The budget has been adjusted following a review of the assets under ownership, resulting in an additional EUR 0.8 million in 2024 depreciation costs compared to the guidance announced on 7 December 2023.
• Operating costs: In its initial guidance, the Group planned to incur EUR 12 million in operating costs. But an efficiency and cost-reduction programme has given better-than-expected results. The Group now plans to save an additional EUR 1.6 million in operating expenses, which it aims to reduce to EUR 10.4 million for the full year.

Contacts:
CEO of AUGA group, AB
Elina Chodzkaitė-Barauskienė
[phone]

*IMPORTANT NOTICE

The information is neither audited nor reviewed by independent third parties and should be considered as preliminary and potentially subject to change.

This information may also contain certain forward-looking statements, including but not limited to, the statements and expectations regarding anticipated financial and operational performance. These statements are based on the management's current views, expectations, assumptions, and information as of the date of this information announcement as well as the information that was accessible to management at that time. Statements herein, other than statements of historical fact, regarding AUGA group’s, AB future results of operations, financials, business strategy, plans and future objectives are forward-looking statements. Words such as “forecast”, “expect”, “intend”, “plan”, “will”, “may”, “should”, “continue”, “predict” or variations of these words, as well as other statements regarding matters that are not a historical fact or regarding future events or prospects, constitute forward-looking statements. AUGA group, AB bases forward-looking statements on its current views, which involve a number of risks and uncertainties, which may be beyond AUGA group’s, AB control or difficult to predict and could cause the actual results to differ materially from those predicted and from the past performance of AUGA group, AB. The estimates and projections reflected in the forward-looking statements may prove incorrect and the actual results may materially differ due to a variety of factors, including, but not limited to, legislation and regulatory factors, geopolitical tensions, economic environment and industry development, commodities and markets factors, environmental factors, finance-related risks as well as expansion and operation of generation assets. Therefore, you should not rely on these forward-looking statements.

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