(Corrects in the 4th paragraph the number of customers who are adept of the application to “3 thousand”, and not “13 thousand”, differently from what was previously informed)
by Roberto Machel
SAO PAULO (Reuters) -AgroGalaxy, one of the largest agricultural input companies in retail, reached more than 1 billion reais in sales by digital means at the end of June, since the scheme was implemented in October, and evaluates that the systems they may help to increase the company’s revenue, which seeks to consolidate the resale market that is still quite dispersed.
The company’s net revenue reached 4.74 billion reais in the 12 months ended in June, up 30% compared to the previous period, also in terms of prices and higher sales volumes, informed the company on Monday.
“We see (digital sales) as a tool to increase productivity… Using digital we are freeing up the technical consultant to serve new customers or expand existing customers,” AgroGalaxy CEO Welles Pascoal told Reuters.
Since October, the company’s customers have been able to perform various operations with digital assistance, such as authorization for billing goods, and in May this year the company launched a specific application, already used by 3 thousand of AgroGalaxy’s 18 thousand customers, said the CEO .
The company, in addition to selling inputs, offers a series of services to the agricultural producers with which it does business, such as storage and drying of the grain received, as well as assistance in marketing the products.
Input sales usually represent about two-thirds of AgroGalaxy’s operation, while the grain business accounts for the rest.
In grains, two thirds refer to origination with producers, while one third is obtained via “barter” (the traditional operations of blocking advance sales of agricultural products in exchange for inputs).
Cash generation measured by adjusted Ebitda increased 67% in 12 months, to 294.5 million reais, with sales made possible by digital means helping to dilute expenses, noted the financial director Mauricio Puliti, explaining that the 12-month indicator allows a better view of the business, impacted by seasonal factors, such as planting and harvesting periods.
In the second quarter, the adjusted Ebitda totaled only 2.5 million reais, for example, while the company recorded a net loss of 51.4 million reais. In 12 months, there was an increase of 81.6% in net income, to 78.1 million reais.
According to Puliti, most of the increase in Ebitda is due to higher volumes sold, while a smaller portion is due to higher prices.
Now with 108 stores in nine Brazilian states, the company also expanded sales with new business points – until the end of last year, it had 93 establishments.
Of the 15 new stores, seven were incorporated via acquisition.
“It follows the line of growing on both sides, consolidating and opening new stores”, said the CEO, noting that the recent IPO raised 333 million reais, which will be used for acquisitions (70% of the resources) and organic growth.
Welles recalled that, although the company is one of the leaders in the resale of inputs, it has only 4% of a market that revolves around 110 billion reais a year, in which 5,500 companies operate.
“Our objective is to lead this consolidation process, Brazil, among the important agricultural producers, is the one with the most fragmented distribution of inputs. In the United States, six companies hold 50% of the market”, he stated.
The company works in general with producers who cultivate soy and corn in areas of 200 to 10 thousand hectares, while larger producers, which represent 30% of the market, buy directly from input companies, without intermediation from resellers.
About 94% of the company’s sales are to soybean and corn producers. Another portion of clients includes coffee growers in Minas Gerais and São Paulo.
(Edition by Nayara Figueiredo)
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