AgroGalaxy registers loss of BRL 257.1 million in Q2 2023

Brazilian agricultural input distributor AgroGalaxy posted an adjusted net loss of BRL257.1 million in the second quarter of 2023.

The loss was 138.9% higher compared to the BRL107.6 million loss recorded in the same period of 2022.

According to AgroGalaxy, the negative results were as expected due to drastic fluctuation in the global pesticide markets caused by the closure of factories in China during the COVID-19 pandemic.

″This is a year of adjustments. In the pandemic, the prices of active pesticide ingredients that Brazil imports rose with the stoppage of factories in China, and then fertilizers more than doubled with the Russia-Ukraine war, raising agricultural costs in the 2022/23 harvest,″ said Welles Pascoal, CEO by AgroGalaxy.

He said, in the second half of last year, prices for grains and inputs began to fall, and this entire situation ended up resulting in ″a growth in the inventory of agrochemicals, at exorbitant costs.″

″About 30% of the volume was stopped by one of the leaders in this market, with a share of approximately 6%,″ the CEO explained.

In the first half of the year, there were a lot of defaults and renegotiations of prices and payment terms with suppliers and customers.

Welles Pascoal claimed that the worst phase was over and the next step was to reduce accumulated inventories due to high input prices.

″As of December 2022, our inventory amounted to BRL1.6 billion. With the campaigns we carried out, we sold the equivalent of BRL900 million, and we also negotiated the return of BRL400 million to suppliers. In other words, that inventory dropped to BRL300 million,″ Welles said.

According to him, orders for inputs at the close of the first half were 31% lower compared to the previous year, indicating that buyers had waited until now to resume purchases.

AgroGalaxy projects, for 2023, consolidated net revenue between BRL11 billion and BRL11.3 billion.

AgroGalaxy inaugurated two more new inputs resellers in the second quarter of this year, now having 169 stores in 14 states, with more than 30,000 active customers in total, 31% more than at the end of June last year.

In 2023, AgroGalaxy opened six stores, and two more are to open by the end of the year.

The distributor highlighted a 48% growth in sales of bioinputs thus year compared to the same period in 2022, rising to BRL27 million.

″The time is to take care of the organization. Our annual plan has to be delivered, but without aggressiveness,″ he said in conclusion.

(Editing by Leonardo Gottems, reporter for AgroPages)