JSC Steppe AgroHolding is a major player in the Russian agricultural sector and owns a diversified portfolio of assets in four key segments: crop farming, dairy farming, fruit growing and vegetable growing. AgroHolding's assets are located in southern Russia, in the most favourable regions in terms of climate, crop yields and logistics: the Krasnodar, Stavropol and Rostov regions and the Republic of Karachay-Cherkessia. Steppe AgroHolding owns 50% of RZ Agro, one of the major producers of grain and oil crops in southern Russia jointly controlled by Sistema and the Louis-Dreyfus family. The company currently manages six farms grouped into three regional clusters
Steppe AgroHolding is a big agricultural player, one of Russia's 10 largest land owners, that operates in four high-potential agricultural segments with high margins and growth rates: crop farming, dairy farming, fruit growing and vegetable growing. Steppe AgroHolding's strategic goal is to achieve leadership in its key market segments by using the advantages of diversification and geography. Soil quality and the optimal amount of precipitation in the regions where the company operates make it possible to ensure high yields, while the short transportation distance creates advantages in terms of logistics costs.
In 2017, Steppe AgroHolding achieved an all-time high crop yield of 1.35m t (including about 720,000 t of wheat), which is 30% more than in 2016. This was in part due to the expansion of land assets and introduction of new agricultural technologies. Steppe AgroHolding's land assets totalled 380,000 ha as of the end of 2017, including 106,000 ha of RZ Agro. In 2017, Steppe AgroHolding acquired 65,000 ha of land in the Stavropol and Rostov regions.
As of the end of 2017, milk production grew by 9.0% to over 39,000 t due to increased milk yield. Steppe AgroHolding remains Russia's leader in terms of milk yield per cow – over 12,000 l per year.
In 2017, the company started the construction of a new generation dairy farm with 3,400 lactating cows. Pilot operation began in March 2018 and the farm is expected to reach its design capacity of 20,000 l per year in 2021. Import substitution potential, inefficient producers leaving the market and the deficit of high-quality raw milk create favourable conditions for developing dairy farming in Russia.
Yuzhny Agricultural Complex, a part of Steppe AgroHolding, is Russia's biggest producer of protected-ground vegetables, with 132 ha of greenhouses. In 2017, gross harvest of tomatoes and cucumbers reached 44,900 t, and the average yield was 34.4 kg/sq m. In 2017, Yuzhny Agricultural Complex continued implementing the programme aimed at increasing operational efficiency. The company paid special attention to promotion of its brand and developed a new modern logo and packaging.
In 2017, gross apple output by Steppe AgroHolding's farms grew by 35% to 21,500 t. This significant increase is due to the new orchards starting to bear fruit and the old ones giving bigger yields. The orchard yield also grew by 5%, to 42.1 t/ha, in 2016. The area of Steppe AgroHolding's intensive orchards at the end of 2017 was 745 ha.
Strong operating results allowed Steppe AgroHolding to increase its revenue by 22.2% in 2017 despite the pressure of the world wheat prices and strengthening of the rouble. Adjusted OIBDA in 2017 was RUB 4.0bn (40.6% growth year-on-year).
Steppe AgroHolding will continue acquiring new land, increasing the number of lactating cows and commissioning new dairy farms. To improve the efficiency of its business, the company also intends to develop such related activities as grain trading, seed production and irrigation systems. Improvement of the operational efficiency, increase of gross yields and development of own infrastructure for grain storage and handling create the foundation for entering new export markets due to larger product batches and control over the entire value creation chain.