Ladies and gentlemen, welcome, and thank you for joining the AGRANA results for the first half of 2023-2024 conference call. Throughout today's recorded presentation, all participants will be in listen-only mode. The presentation will be followed by a question and answer session. If you would like to ask a question, you may press star and one on your touch tone telephone. Please press star key and zero for operator assistance. I would now like to turn the conference over to Hannes Haider, responsible for investor relations. Please go ahead, sir.
Good morning, ladies and gentlemen, and welcome to AGRANA's conference call presenting our results for the first half of 2023-2024. With us today are three out of four members of our Management Board. Our Chief Executive Officer, Markus Mühleisen, will start the presentation with an overview on the highlights. He will also comment briefly on the market environment and the status of our sustainable value growth strategy. Our Chief Technology Officer, Norbert Harringer, will afterwards cover the topic, raw materials and production, as well as ESG and investments. Finally, our Chief Financial Officer will report on the half year financials in detail, and he will also conclude with an outlook for the remaining financial year. As announced in our invitation, a presentation is available in reference to our call.
You can find it, as always, in the IR section of our website, and the presentation will take about 35 minutes, and afterwards, the management board will be glad to answer your questions. Now, I may hand over to our Chief Executive Officer, Markus, who will start with the presentation.
Thank you, Hannes, and good morning, everyone. If you turn to page two of the presentation, I'll make some general comments to get us started. We remain on track after the first six months. We just concluded a good second quarter, actually a little bit better than our internal expectations. We obviously see continued volatility in the environment. It remains very dynamic, but also we continue to navigate these new market situations and volatile market situations very well. We are pleased with the performance in all of our segments and divisions. We're particularly pleased with the continued good development in the fruit and sugar segment.
As we expected, the first half of this year proved to be a bit more challenging in the starch segment, and that's really driven, on the one hand, by the lower ethanol prices that we're seeing. If you remember last year, high ethanol prices provided a lot of tailwind in the starch segment. This year, we faced some more headwinds here, and so that certainly has led or been a big contributor to the year-over-year decline in the starch EBIT numbers. But we also in the starch segment, we expected the slowing economy to have a bit more impact than in the other segments.
We know from our customers that in a number of their sales channels, they're seeing declines. And I just wanna, as one example, wanna highlight the paper and pulp industry, which, as you know, is struggling with softening demand on their side, which obviously is impacting then our sales to them. And then as a third sort of effect, which across all segments, but bit more maybe pronounced in the starch segment, we do see customers destocking.
Through the last few years, during crises, everybody increased their inventory levels to ensure a bit more robust supply with all the different supply challenges, as now, on the one side, interest rates are going up, and on the other side, the supply chains are back to more normal. We see across all customers, a big effort to reduce inventory levels. Working capital has become a big topic for all of our customers. So these are some broad effects, and they were a bit maybe more pronounced in the starch segment and what we sort of expected that, which is why we're also pleased with the results there.
We continued on our strategic journey, and I want to highlight in particular the sustainability strategy. We continue our leadership position here as the first food company in Austria with validated emission reduction targets. As you know, we submitted a number of months ago our emission reduction plans to the non-governmental organization SBTi, and we've now been verified, or those plans have now been verified and validated. As we look towards the full year, we can confirm our outlook with a moderate increase in sales revenue, but a very significant increase in EBIT. I will talk a bit more about our growth strategy.
We're now making the switch from a crisis mode into growth mode, and we wanna look forward and now focus more on the potential that AGRANA has. If you turn to the next page, a few high level numbers, and Stefan, as noted, will then take you through the details. I just wanna highlight sort of three numbers. Revenue was up 9.3% to EUR 1.9 billion, but our profit measures, the EBITDA in particular at 16%, grew faster, but also our operating profit at 30% grew faster.
I think the reason I wanna highlight that is because it reflects really, some of also the strategic decisions we've made two years ago, to focus more on margins, to drive the more profitable parts of our business, and also to work closer with our customers. You see the results of those decisions and those changes now reflected in both the quarterly numbers as well as the half yearly numbers. We continue to make progress there, and we will accelerate that then through our sustainable value growth strategy. If you turn to the next page, page four, we've got four priorities for the remainder of the year.
As mentioned, it's now time to switch from crisis mode to execution and growth mode, which means we are pushing harder on innovation. We are pushing harder on driving growth with particular customers. But also as we now enter the planning cycle for the next fiscal year, we wanna make sure that we put the right resources into place to drive growth in the years to come. Clearly, environment remains volatile, so we need to continue to be vigilant about inflation. As I mentioned, we do see a number of our customers in particular impacted by that. We work with all of our customers to provide solutions.
We are a bit concerned about the general direction, and especially in Europe, some of the policy decisions that are being made and how that might impact the economic growth in Europe. We also obviously have to continue to watch interest costs very closely. And that is also then the third priority or closely linked to the third priority for us, which is continuing to improve our working capital management. We do see that as one of the key areas for us to focus on in order to improve our financial headroom, so that we can then also continue to invest in the growth areas that we see.
And then also drive harder now on implementing our sustainable value strategy. It is a growth strategy. And so let me take you through a little bit more detail on that, on the next few slides. And I know that many of you have attended also our annual meeting, where we introduced our strategy. And if you go straight to slide number six, that sort of summarizes at a high level the key aspects of our strategy. First and foremost, let me just reemphasize, it's a growth strategy. We see a tremendous opportunity for Agrana in a number of different ways, and it is about now pushing harder on growth. But it's also a profitability strategy.
It's about value creation, and you can only create value if you create value for your customers. You need to be successful in the marketplace, and that's why when we talk about value, it's both profitability, but an increased focus on customers. And then thirdly, it needs to be sustainable in the broad sense. So clearly, there's tremendous opportunity for AGRANA to provide solutions for growing interest in environmentally friendly products. At the same time, it's about economic sustainability and social responsibility, and that underpins our strategies. We, at a high level, we've got three pillars of our strategy, which are firstly around continuing to maximize the potential that we have in our existing core business.
But then secondly, as a second pillar to develop some more growth-oriented markets, recognizing that many of our existing core markets are already quite mature, so we have to look where future growth is gonna come from? And at the same time, as a third pillar, very much recognize that it also means continuing to evolve our organization, evolve our culture. And so these are the three pillars of our strategy.
We have clarified also our financial metrics that will be key to go forward and with that, then, deliver on that promise that we have to be both a refiner, processor of agricultural raw materials, which is one of the historical strengths of AGRANA, but then also start to become much more of a supplier of natural ingredients and solutions, and create value for our customers. Let me then quickly add a little bit more color to each of those pillars on page seven. When we talk about strengthening our core business, a real important part across all segments is to increase profitability, increase productivity, increase efficiency. That is probably the biggest focus here.
In addition, each segment, there are some particular focus areas. In the fruit segment, it's about dialing up further innovations. It's also about pushing harder diversification into new channels and markets, driving some of the geographic growth opportunities that we see there. In the starch segment, there it is, within a broad portfolio, driving harder those added value, differentiated kind of parts of the portfolio. This is also where innovation plays a big role.
But then thirdly, that very tight management of the end-to-end process through a number of process improvements and just making sure that here really we work closely together across all functions is a big focus. And then in the sugar segment, here, it's also about driving the more added value parts of the portfolio, where we can build upon already strong market positions, but really drive the more profitable part of the portfolio. At the same time, working very closely here with our farmers to ensure a stable raw material supply.
This has been one of the challenges in the past years, and has always, you know, has significantly impact, as you know, the profitability of that segment. That's on the first pillar. On the second pillar, developing future markets. What we've done here is we've taken a very broad view on where the opportunities are going forward. Where are the big market trends? Where do we expect disruptions? Where do we see increased needs from our customers? But where is also a very good synergies with the AGRANA business, and how can we also leverage more the existing synergies across all divisions?
We've identified three areas that are of particular interest for us, and that is natural flavors, where we can build already on a successful business in our Austria Juice business, but then also looking at plant-based proteins and also looking at bio-based materials. We see tremendous growth opportunity in all three of those areas, along with the demand from our customers for intelligent, smart solutions in line with some of the big trends and challenges that we see overall in the future. You should expect to hear more news and details over the next coming months.
On the third pillar, on slide nine, just to summarize how we're thinking about how do we evolve our organization, and it's both on the culture side, but then also looking at structures, how can we make things leaner? How can we simplify processes? What are the competencies needed to be successful in a changing world? How can we position ourselves as a strong employer of choice in a world where there is obviously an increased battle for the best talents? We feel that there is a good foundation we can build upon, but we also need to further evolve AGRANA, which is why it's the third pillar of our strategy.
In the interest of time, I'm just gonna move on and make a quick remark on the market environment. Moving to slide number 11. As I mentioned in my opening remarks, clearly, in a number of, or in most of our business segments, we see the impact of a slowing economy, with consumers reacting to high inflation. This is certainly true in the fruit segment, where our customers are also adjusting to those changes. We're working with our customers on how to respond to that. We're, you know, quite well diversified, so this is something that we know how to deal with.
I've already made some comments on the starch segment, and, here, again, customers facing not just a softening demand themselves, but also this notion of inventory reduction. It's having a big impact. And then under the sugar segment, next to, you know, some real positive signs, obviously, we need to figure out, and by we, I mean, a Europe as in totality, as to, how do we, on the short and long term, sort of deal now with the impacts of the war in Ukraine. Ukraine is, as you know, a strong exporter of agricultural raw materials. Traditionally, they've served sort of the world market, in the short term now, their access to these world markets has been blocked.
In particular, via the sea route, many of those agricultural products coming into Europe, as a result, also, including sugar. This is leading to some short-term disruptions in particular markets. It's also impacting AGRANA markets, but we're dealing with that. But I think the bigger topic here in medium and long term is politically, what does it mean?
And, assuming that Europe that there is going to be a strong political will to open up or to keep the markets open to the Ukraine in the medium and long term, how can, you know, as an industry and sort of from a political environment, can make sure that this all happens in the orderly fashion that products that are coming into Europe meet the same high quality and production standards that we're used to in Western Europe? And what are the right political sort of framework conditions for that? So there's a lot, quite a bit of political work required here on that topic.
That's it from me, and so let me turn it over now to Norbert on an update on raw materials and production.
So thank you, Markus. Ladies and gentlemen, a warm welcome to our today's conference call, also from my side. After looking at the sales and market environment, let's now turn to the front stage in our supply chain to raw material and production. As you know, half year results publication is always around the start of our campaigns of apples, potatoes, and sugar beet, and so far, all campaigns are running well, I have to say. Referring now to the three segments, I would like to start with fruit. For the fruit preparation business, the harvest of strawberry, our principal fruit, was completed in July, with positive results in all relevant procurement markets. Overall, in the first half of the current business year, about 176,000 tons of raw materials were purchased for the fruit preparations activities, including 29,000 tons of strawberries.
In the 2023 berry juice processing season in the fruit juice concentrate business, which ended at the beginning of September, raw material availability was on average. For apples, the principal fruit for juice concentrates, a weaker harvest is predicted overall in the European Union, including also Poland. This means that rising raw material costs can be expected in the now started 2023 apple campaign. We can report in the starch segment that a good to average wet corn campaign, which started in September, is expected. However, a smaller harvest is projected for potatoes. Given the unfavorable weather conditions during the growing season, contract fulfillment by the growers is expected to reach about 85% of the contracted amount of starch potatoes.
In general, purchasing of wheat and corn from the 2022 crop for our facilities in Aschach and in Pischelsdorf is completed. Including the amounts contracted from the 2023 harvest, the bulk of the raw material supply for the current business for the year is secured. I would like to draw your attention also to the corn and wheat quotation presented on our slide 15. The Euronext Paris commodity derivative exchange fell markedly since early March 2023. The price declines were caused, among other things, by the good volume of the winter cereal harvest in the European Union, an average to good outlook for the 2023 corn harvest, solid stocks, and lower demand for commodities due to the economic situation. Let's now continue with the sugar segment on slide 14.
Beet processing in the sugar segment has been underway at all plants since the beginning of October. Capacity utilization in the factories is anticipated to be higher than last year, thanks to the more contracted acreage. To provide you with some facts and figures, in Austria is the most important growing region, the contract area for beet production increased by 6% from the prior year to about 36,200 hectares. We are expecting an average beet yield of about 72-75 tons per hectare. Based on the current estimate of beet volume this year for the AGRANA Group, factory utilization is expected to rise by more than 10 percentage points year on year to 95%. Ladies and gentlemen, as the Chief Executive Officer highlighted at the beginning, we are pleased to announce a key further milestones in the area, in the area of sustainability.
The Science Based Targets initiative, short SBTi, a globally recognized non-governmental organization, has completed its review of the AGRANA Group's ambitious climate targets and officially confirmed that they are in line with the 1.5 degree centigrade goal of the Paris Climate Agreement. This makes us the first food company in Austria with validated emission reduction targets, meaning a 50% reduction of greenhouse gas emissions in Scope 1 and 2 by 2030, and, and approximately 34% reduction in Scope 3 in the same period. The emission reduction path in the company's own manufacturing, that means Scope 1 and cope 2, calls for the continuous transition from fossil fuels to renewable energy sources in order to achieve net zero emissions by 2040.
In total, based on current assumptions, AGRANA would have to invest about EUR 470 million by 2040, to avoid the greenhouse gas emissions out of Scope 1 and 2, generated in its own production operations during the processing of raw materials used. The specific projects included in this value are limited to those contained in the group's internal five-year plan, while projects and cost estimates included beyond the five-year time horizon, are to date based on modeling. At about 78%, the main contribution to the Scope 3 portion of the AGRANA group's corporate carbon footprint, comes out of the production of the agricultural raw materials processed by the company. Reducing emissions generated in agricultural production is thus the focus for AGRANA's efforts to cut Scope 3 emissions.
Important approaches are, for example, the creation of greater transparency in the procurement of raw materials, especially from overseas, in order to reduce emissions from land use changes, the use of emission-reduced fertilizers in crop production, and the introduction of regenerative agricultural practices at our suppliers. Ladies and gentlemen, let me now end with an overview about our investment activities. In the first half of the current business year, AGRANA invested about EUR 42 million, or EUR 6 million more than in the year-earlier comparable period. In addition to the regular projects for product quality and energy efficiency improvements, and for asset replacement and maintenance across all production sites, the following individual investments are worthy to note.
In the fruit segment, the expansion of our raw material storage in Jacona, in Mexico, the replacement of various refrigeration units in Centerville, Tennessee, in the USA, and a new wastewater treatment plant in Ostrołęka, in Poland. In the starch segment, measures to increase speciality corn processing in our corn starch factory in Aschach, in Austria, the expansion of the company wastewater treatment plants, also in Aschach and in Gmünd, here in Austria, and the upgrading of the cooling performance in our biorefinery in Pischelsdorf, in Austria. In the sugar segment, the modernization of the control system in Leopoldsdorf, the production process optimization by replacing the filter presses in our sugar factory in Sereď, in Slovakia, and the optimization of the evaporator station in Kaposvár, in Hungary.
The total investment across the three business segments in the current financial year at approximately EUR 140 million is to significantly exceed both the 2022, 2023 value, and this year's budgeted depreciation of about EUR 120 million. Around 14% of this capital expenditure will be for emission reduction measures in the group's own production operations, as part of the AGRANA climate strategy, and to reach our ambitious reduction targets according to our SBTi verified climate path. That's all from my side, and I'm pleased to hand over to Stephan for his financial overview.
Thank you, Norbert. Good morning, ladies and gentlemen. Let's have a quick look at the financials for the first half year, 2023/2024. We started the revenue by segment. As already mentioned, we saw an increase in total revenue of 9.3%, up to EUR 1.96 billion. In the fruit segment, an increase of 8.7%, up to EUR 791 million. In the fruit preparations business, we saw an increase of 9%, up to EUR 645 million. In the juice business, EUR 145 million, so revenue went up by 5%. The whole increase was driven by prices. In the fruit prep business, we saw stable sales volumes, whereas in the juice business, we saw a decline of, a decline by around 15%.
In starch, sales volumes declined overall, so across the whole portfolio, on average, by nearly 17%, prices went up on average by 7%. So, you see that the decrease in revenue to EUR 614.8 million was driven mainly by lower sales volumes. A very significant development we saw in the ethanol prices, so the Platts quotations went down by 30%. In sugar, an increase of 35.2% in revenue, so up to EUR 553.6 million. Also here, driven by massive price increase by more than 75% versus prior year, sales volumes went down by around 22%.
This was mainly driven by the first quarter, declining volumes, and this was due to the imports from the Ukraine, whereas in the second quarter, the sales volumes recovered. EBIT by segment. We see, of course, a significant improvement in the fruit segment. What we have to mention, in the prior year, we had this write-off of EUR 90 million goodwill in the first half of the business year. Let's turn to the operating profit. There, we went up from EUR 29.8 million up to EUR 43.7 million, so an increase of 47% or EUR 14 million, driven by the fruit preps business. The difference here is plus EUR 10.5 million, and in juice, plus EUR 3.5 million.
The total result of the fruit preps business then was EUR 31.7 million, in juice, EUR 12.1 million. The results are driven by higher margins, as I already mentioned, so sales volumes in fruit preps were stable, whereas in juice we had a drop of 15%. In the starch business, we saw a very negative development in the ethanol business. The EBIT contribution was EUR -4.9 million in the first half of the year, whereas we had EUR 31 million plus in the first half year of 2022-2023, so the difference is EUR -36 million. This was partly offset by the starch results, where we had a plus of EUR 28 million versus the prior year, but also the equity results went down by EUR 11 million.
So in there, the difference of EUR -20 million results from. In sugar, a significant, a very significant improvement of the profit, up to EUR 31 million. So this, as already mentioned, was driven by the very significant increase in sales prices. So let's move to the consolidated income statement. So as already mentioned, revenue up to EUR 1.96 billion. EBIT with 110.9 million EUR, significantly above prior year. Prior year, in prior year, we had a depreciation of the write-down of the goodwill of EUR 90 million, which affected, of course, the EBIT very negatively. The profit for the period after taxes resulted in EUR 64.3 million. So this, this was also a significant improvement versus prior year, and the earnings per share amounted to EUR 0.97.
Energy costs, stable development in the first half of the business year. Total amount was EUR 101.6 million. So as we see that, we more or less have things now under control, so we are executing our coverage strategy here, and we are also looking forward, let's say, at least stable prices here. The net financial items, so we see a total of -EUR 24.3 million. This is, of course, a significant higher amount here. So driven, of course, by the net interest expense, -EUR 15 million versus -EUR 4.3 million. So the interest rates increased very significantly, and also our net financial debts in the first half of the year were significantly higher by around EUR 115 million than prior year.
Currently, translation difference, of course, also driven by countries like China, Turkey, Argentina, and Romania. So here, also an increase up to -EUR 7.5 million, so a total of -EUR 24.3 million. The profit before tax, EUR 86.6 million, income tax expense, EUR 22.3 million, with a tax rate of 25.8%. This is in a normal range. When we have a look at the cash flow statement, so you see operating cash flow before changes in working capital of EUR 180.1 million. This is a significant increase of 33.1%, mainly driven by the operating results.
The changes in working capital, still, we have a very high impact here of EUR -142.7 million, mainly driven by the sugar segment, and therefore, net cash from operating activities resulted in EUR 11.7 million. The balance sheet reduction here, mainly in current assets. So total assets amounted or amount to EUR 2.8 billion, a decrease of 6.5% versus prior year. Equity quite stable, with EUR 1.25 billion. Equity ratio, 44.4%, still healthy. The net debts, as already mentioned, increased by approximately EUR 100 million versus prior year, and therefore, the gearing increased up to 62.5%. So let me finally come to the financial outlook.
As Markus already mentioned, for EBIT, we still, of course, expect a very significant increase, whereas we always have to mention that we had the write-down of goodwill of EUR 90 million in the prior year. Revenue, now we expect a moderate increase versus prior year. With the segments, in fruit revenue, a slight increase is expected. EBIT should be up very significantly. Starch, a moderate decrease in revenue, a significant decrease in EBIT, and in sugar, we expect a significant increase in revenue and a stable EBIT for the business year. The outlook for the third quarter, last year we reported an EBIT of EUR 39.1 million, so our guidance for Q3 2023/2024 is below the year earlier figure. Thank you, ladies and gentlemen.
Let me now hand over to Hannes for the financial calendar.
Yes, thanks. Before we go on with the Q&A session, I just wanted to inform you that our financial calendar for the next financial year, 2024/2025, was published recently, and you can find all details on slide 34, but also on our IR website. On the website, you can, of course, also find our current roadshow table. We will now go on with the Q&A session.
Ladies and gentlemen, at this time, we will begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Anyone who has a question may press star, followed by one at this time. Our first question comes from the line of Stefan Maxian from RBI. Please go ahead, sir.
Hello, good morning, and thank you for the presentation. I have some questions, and I would start with the one regarding your outlook, because you said you broadly confirmed it, but there were made some adjustments. So firstly, could you please elaborate on the revenue adjustments in, for the group, but also for the starch division? And additionally, you also lowered the sugar EBIT guidance. Could you also explain why is that after the recent developments? And the final question is: What are your expectations regarding ethanol prices? Thank you.
Yeah. Okay, so, sorry. I mean, I think you know that the first question, revenue, starch, and group is very, very easy to answer. I mean, revenue, you know, is influenced by prices and by volume. When we lower our guidance, this means we expect lower sales volumes or lower sales prices versus our budget. In starch, we already mentioned that we are significantly behind prior year in sales volumes and also behind our expectations at the beginning of the year. Also, ethanol was much lower in prices, also volumes dropped. This is a result of both. Our expectations are adjusted now in terms of prices and volumes, and this also then has an effect on the group level.
Sugar EBIT, as already mentioned in the first quarter of the business, we saw a sharp decline in sales volumes. We lost around 30% versus prior year. So it's quite difficult, let's say, to compensate for that in the remaining year, so we are missing the margins here. So the question is also what will happen now with the imports or from Ukraine? So what will be the effect in the third quarter and in the fourth quarter? So our expectation is that there will be a certain effect, and therefore, we adjusted our guidance at stable EBIT. And ethanol prices, this is hard to predict. Currently, we see more and expect more or less a stable development of the current price level.
Our next question comes from the line of Vladimira Urbankova from Erste Group Bank. Please go ahead.
Yes, hello. Thank you for giving me opportunity. I would maybe continue with this outlook questions. What is the major reason behind expected lower EBIT in Q3, which are the main contributors to the result? And then maybe a little bit on the inflationary pressures. So where do you see the major pressures right now in terms of pricing of your products and also internally in terms of, for example, personal costs? So if you can elaborate a little bit on inflation impact. And then last but not least, what is your current exposure to Russia, respectively, Ukraine, and how is the business there? Thank you.
Okay. Maybe let me start with the last question. Russia, yeah, as in the prior year, we had a very stable and good performance, so our expectation at the beginning of the year was a little bit or was lower. What we see currently are stable sales volumes. We are more or less on a level prior to the beginning of the war in Ukraine. As you already maybe also have seen, the currency softened. This has, of course, an impact on the profitability after translating the currency. Overall, with the higher sales volumes compared to prior year, we have a stable and very profitable business in Russia.
So sorry, the second question, I think, was still on the guidance, yeah. So I think adjustments on the sugar business, EBIT, yeah, again, I mean, we see some pressure potentially on the sales side. This is reflected now in our new guidance. When we talk about Q3, yeah, maybe, you know, when we publish these numbers, we are at the very beginning, let's say, of the third quarter. So this is simply our expectation. I mean, the third quarter last year was quite strong, so now it depends on the campaigns. Yeah, from the current situation, I would guess that it must be slightly below the Q3 the prior year. So on the second question, sorry, I. Yeah, inflation, of course, plays a role, yeah.
We saw an increase in our personnel costs of around 7%-8% in the first half year. Yeah, so as you already see, what we see now is that, you know, the negotiations now taking place with the unions. Of course, I mean, we have to expect a further significant increase. This has to be passed on, but of course, on the other hand, we need to have a look at how we can compensate for that also in our overall cost structure. Yeah.
Okay, thank you.
As a reminder, if you wish to register for a question, you may press star and one. There are no further questions at this time. I hand back over to Hannes Haider for closing comments.
Yes, thanks. If there are no further questions, thank you for your participation in the call, and we wish you a nice remaining day. Goodbye.