“The retail market has shown many consolidation movements. This is undoubtedly a trend for the coming years.”
Fernando Manzeppi is executive vice president of AgroGalaxy, was general director of Sumitomo in Brazil, and president of Nufarm in Brazil. Manzeppi is an agronomist from the Federal University of Mato Grosso and holds an MBA in agribusiness management from Fundação Getúlio Vargas.
Fernando Manzeppi, executive vice president of AgroGalaxy
AgriBrasilis – How did AgroGalaxy begin? Which companies are part of the group and in what sectors?
Fernando Manzeppi – AgroGalaxy is a retail platform for agricultural inputs and services aimed at the Brazilian agribusiness, operating in the commercialization of agricultural inputs, seed processing, origination, storage and commercialization of grains, in addition to providing advisory and technological services.
Formed from acquisitions in different Brazilian regions, AgroGalaxy ended 2022 with 163 stores, including commercial points, 28 silos, grain storage unit of the seed processing unit, three own soybean seed plants and 10 toolings, located in 13 states, and covering over 1,000 cities.
The retail market has shown many consolidation movements. This is undoubtedly a trend for the coming years. Opening stores in new regions is important to increase area coverage and, consequently, market share.
According to a recent survey by the Ministry of Agriculture and Livestock (MAPA), of the 100 richest cities in Brazil in terms of agribusiness, 11 are located around the BR-163, with the city of Sorriso, State of Mato Grosso, ranking first nationally. The data reveal that the region has billionaire economic potential and, as we have been mapping the surroundings of the BR-163 for some months now because of its relevance in the production of soybean and corn, we decided to expand our operations in the region.
Through our companies, we have been serving the States of Goiás and Minas Gerais for over 35 years. In fact, one of our investees – Rural Brasil – was born in the city of Jataí and has established itself as one of the largest resellers in the State of Goiás. In recent months, we opened three more stores in the regions of Goiás and Minas Gerais.
In March 2023, we will arrive in the BR 163 region, in the State of Mato Grosso. With this new coverage, we will be present throughout the Brazilian Cerrado and, in the coming months, we will open four stores in the municipalities of Sorriso, Sinop, Lucas do Rio Verde and Nova Mutum, where we already have a team of technical consultants.
AgriBrasilis – How does AgroGalaxy finance its working capital? In what ways has the increase in the base interest rate impacted financial costs?
Fernando Manzeppi – The financial result was impacted by the sharp increase in the base interest rate between the third quarter of 2021 (3Q21) and the third quarter of 2022 (3Q22). We remain committed to projects aimed at reducing working capital, such as improving the operational network.
There was a relevant impact from the price increase compared to 3Q21, both in the pesticides and fertilizers segments, which, added to the advances in the efficiency of our operations, led to important operating gains: input revenue per CTV grew 38% and per customer + 69% in 3Q22, compared to the same period of the previous year.
Specialties, the segment with the highest gross margin, increased from 4.8% to 5.4% of the input mix. The order backlog also showed an important evolution: R$ 2.8 billion in September 2022, an increase of 92% compared to the same period of 2021.
The company’s performance is represented in the table below.
| Financial Highlights | 3Q22 LTM | 3Q21 LTM | Var.% |
| (US$ millions) | |||
| Total Net Income | 2,029.27 | 1,059.47 | 91.50% |
| Input Revenue | 1,297.84 | 692.32 | 87.50% |
| Grain Revenue | 731.43 | 367.15 | 99.20% |
| Breakdown Net Income | 2,029.27 | 1,059.47 | 91.50% |
| Organic Net Income | 1,689.74 | 1,059.47 | 59.50% |
| M&A Net Income | 339.53 | – | n.m. |
| Growth Indicators | |||
| Same Store Sales | 46.30% | 24.30% | +22.0 p.p. |
| Organic Volume Variation | 20.80% | – | n.m. |
| Organic Price Variation | 32.90% | – | n.m. |
| Inorganic Addition | 33.50% | – | n.m. |
| Input revenue/CTV | 2.27 | 1.59 | 42.70% |
| Digital Revenue | |||
| Revenue Made Possible by Digital Means | 611.55 | 327.14 | 86.90% |
| % of Total Net Revenue from Inputs | 47.10% | 47.20% | -0.1 p.p. |
| % of Net Revenue from Organic Inputs | 57.30% | 50.20% | +7.1 p.p. |
| Adjusted Gross Profit | 254.58 | 145.25 | 75.30% |
| % Net Revenue | 12.50% | 13.70% | -1.2 p.p. |
| Mg. of Inputs | 18.90% | 18.90% | n.m. |
| Mg. Grain | 1.30% | 3.90% | -2.6 p.p. |
| Adjusted EBITDA | 113.29 | 65.77 | 72.20% |
| Adjusted EBITDA Margin | 5.60% | 6.20% | -0.6 p.p. |
| Adjusted Net Profit (loss) | 4.89 | 24.46 | -80.00% |
| Adjusted Profit Margin | 0.20% | 2.30% | -2.1 p.p. |
| Adjusted Net Debt | 307.51 | 134.53 | 128.60% |
| (Adjusted Net Divide/LTM Adjusted EBITDA) | 0.51 | 0.40 | +0.6 p.p. |
| ROIC | 23.00% | 18.80% | +4.2 p.p. |
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