AgroGalaxy, Fertilizantes Heringer, and Biomm Post Losses in Q1 2024

AgroGalaxy, controlled by Aqua Capital, ended Q1 with a net adjusted loss of R$ 249.7 million ($48.5 million).

This loss is 2.5 times higher than in Q1 2023. Additionally, AgroGalaxy’s adjusted EBITDA was negative at R$ 95.1 million ($18.5 million).

This contrasts with a positive R$ 58.6 million ($11.4 million) last year.

The company’s net revenue fell by 42.7%, totaling R$ 1.596 billion ($310.9 million).

Significant drops in fertilizer and pesticide prices, along with lower grain prices, challenged the company.

These issues increased inventories of high-cost inputs purchased after the pandemic and the Russian invasion of Ukraine.

Though the worst is over, the adjustment process continues.

From January to March, AgroGalaxy’s revenue from inputs fell by 56.2%, reaching R$ 691.4 million ($134.3 million).

Grain revenue dropped by 25.1% to R$ 1.208 billion ($234.7 million).

However, the lower-margin grain business, essential for supporting input sales, offered little cause for celebration.

CEO Axel Labourt noted lower investment in technologies for the corn second crop (safrinha) further hurt input sales.

The decrease in corn prices discouraged planting, reducing Brazil’s production area by almost 10%.

Additionally, advance purchases of inputs for the next summer crop, including soybeans, remained subdued.

Labourt expects a recovery in Brazil’s agribusiness in the second half of the year.

To navigate the crisis, AgroGalaxy closed stores and reduced its workforce by about 600 positions, now employing 1,900 people.

The company received capital injections from controllers and extended debt terms.

AgroGalaxy prioritized higher-margin businesses and cut input inventories by nearly 50%.

Barter operations (exchanging inputs for future harvests) expanded for their reliability.

CFO Eron Martins emphasized cost reductions, noting R$ 40 million ($7.8 million) savings in Q1 compared to last year.

Sales of specialty products increased their revenue share by 3.3 percentage points to 11.5%.

Bioinputs grew to 3% of revenue. Meanwhile, pure fertilizers, which have narrow margins, fell from 29.5% to 24.9%.

Fertilizantes Heringer Sees 9.6% Rise in Q1 Losses

Fertilizantes Heringer (FHER3) reported a Q1 net loss of R$ 144.1 million ($28 million), up 9.6%.

However, adjusted EBITDA improved by 62.7%, totaling a negative R$ 52.1 million ($10.1 million).

The company’s net revenue for Q1 2024 was R$ 970.2 million ($188.4 million), a 30% decrease from Q1 2023.

Stable raw material prices internationally contributed to the revenue decline.

Despite lower potassium chloride costs due to ample supply, urea costs increased due to geopolitical tensions and higher demand in North America.

MAP costs remained stable due to suppressed demand in Brazil.

Heringer integrated its special products into its premium portfolio starting in 2024. This shift highlighted its strategic direction.

Biomm Reports Q1 Loss of R$ 17 Million ($3.3 Million)

Brazilian pharmaceutical company Biomm (BIOM3), planning to sell a generic version of Ozempic, reported a Q1 2024 loss of R$ 17.1 million ($3.3 million).

This is slightly lower than the R$ 17.9 million ($3.5 million) loss in Q1 2023.

Biomm’s net revenue increased by 12.5% to R$ 38.6 million ($7.5 million). This growth was driven by higher sales volumes.

The company sells two types of insulin from China and India, an anticoagulant from Italy, and a breast cancer drug from South Korea.

Biomm awaits Anvisa approval for four new products, including a generic Ozempic produced in India.

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