Ukraine war counters post-covid recovery


07 July 2022
Seed provider reports drop in sales

THE war in Ukraine has meant breeder HZPC has been unable to meet the post-Covid sales increase it had envisaged.

HZPC expects the volume of seed potatoes traded by HZPC and its licensees to be just over 900,000 tons for the 2021-2022 financial year, more or less on par with the previous year, and 1% lower than the volume estimate after the second quarter.

During 2020-2021, results were 'strongly affected' by the economic impact of the corona crisis, the company revealed in a recent statement adding that the expected drop in sales this year is largely down to the war in Ukraine.

For the entire fiscal year, HZPC expects to realise a turnover of 342 million euros (in 2020-2021 this was 314 million euros) with a gross margin of almost 62 million euros (9% more compared to the previous fiscal year). Operating expenses are expected to be slightly above €49 million (€1.9 million lower than the previous financial year). These expectations result in an EBITDA of 12.6 million euros (7 million more than the previous fiscal year).

Normally HZPC delivers seed potatoes to Ukraine and orders had already been placed for 2020. But only a limited amount have been delivered and most orders cancelled. While HZPC has openly expressed its solidarity with the Ukraine and its people, it has still continued sending deliveries to Russia. 

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"Potatoes are an important food crop. Seeds and seedlings are an irreplaceable start to all food productions. As such, they are a requirement for food security. This is essential for political and economic stability and the well-being of people all over the world," the company statement said.

CEO HZPC Holding, Gerard Backx, said: "The war in Ukraine has a big influence on the prices of several products and with that the choice of many growers, especially in Europe. After the second quarter, it was clear that potato growers in Europe are somewhat reluctant to plant potatoes for harvest 2022 as a result of the higher prices of other major agricultural products. Since the outbreak of the war in Ukraine, sales of seed potatoes in Europe have been stagnant. Nearly no additional sales have been realised or the additional sales compensating for cancelled orders. In normal years we always realise a few percent of the European sales in the months of March and April. Those are missing this year."

Over the year 2020-2021 HZPC had a net profit of 1.4 million euros. This financial year a net profit of 6.6 million euros is expected. This is limited lower than the profit that was expected after the second quarter. These profit figures do not yet include the costs of the Connecting Growers program, in which certificates of shares are purchased and offered to active seed potato growers of HZPC Holding BV in the European Union. Last year more than 1.3 million euro was spent on this. The agreement is that per year a maximum of 1.5 million euro will be spent.

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