Agrofert announced its core business results last year, which is the worst in terms of profits for the last eight years. And, most importantly, the amount of subsidies the Group's companies have earned and the net profit almost overlaps.
The dependence of the company, which Prime Minister Andrej Babiš parked in two funds, tax subsidies – whether with Czech or European taxpayers – has increased considerably. Especially when two of the European Commission's audits are threatening that the Czechs will have to return hundreds of millions of crowns first.
Among other things, according to auditors, the prime minister is still in conflict of interest because he continues to influence Agrofert's business through trust.
The agrochemical holding's profit last year, according to the statement, reached 1.67 billion crowns. That's two thirds less than a year earlier when the Group earned $ 4.5 billion. At the same time, earnings for 2017 were 38 percent lower than in 2016. According to some companies' estimates, the gains could continue to decline.
For example, the highly profitable chemical company Synthesia, which was 469 million CZK last year after tax and pre-tax, amounts to US $ 569 million, and plans a pre-tax profit of just $ 385 million this year.
It is still unclear at what level the Agroferta company received subsidies. It will be necessary to wait for the annual report that the company regularly submits to the trading register during the holiday season.
However, so far known figures indicate that the level of profit and the amount of withdrawn subsidies will be similar.
At the beginning of the year, Agrofert himself announced that from January to November 2018 he spent 860 million kronor directly from European money. For 2017 it was 952 million. However, the group still withdraws from the Czech state treasury and received a total of about two billion crowns in 2017. So if the trend of withdrawal was similar to the previous year in 2018, the total amount of public money paid will be slightly lower than in 2017.
Similarly, when looking at payments made by the Agrofert company to the State Fund for Agriculture.
The total sum was CZK 904 million last year, which is roughly two hundred million less than in 2017. However, this figure lacks the amount of subsidies from other ministries, in particular the Ministry of Industry and Trade. So, once again, we must remember that Agrofert received 1.1 billion kuna from agriculture in 2017, and total subsidies amounted to nearly two billion crowns.
Spokesperson Agrofer Karel Hanzelka reminds us when we compare the amount of subsidies and profits that "subsidies do not mean profits, they are just part of the cost."
This is true to the extent that without subsidies from non-profit groups subsidizing or not paying or having to seek savings. The same applies to investment subsidies. They either would not invest in the company or seek other sources of funding.
Both would mean a decrease in sales or profit before taxation and amortization. Profit before tax and depreciation, or EBITDA, fell to Agrofert. Namely, 13 to 11 billion crowns.
By the way – this is an important item regarding the loan. The debt-to-debt ratio is closely monitored by banks and determines whether the company's credit terms are fulfilled. If not, they need to increase interest or credit for navigation. And groups of companies borrowed 35 billion CZK.
Consolidated sales rose slightly to CZK 157.5 billion. But in the unconsolidated statement, they dropped by one billion to 225 billion.
According to the press release, the company justifies the deterioration of the results, especially with the worse results of the chemical and food business segment, especially in the Lieken Liechtensian Bakery Group. But as the List already described, the Slovak chemical factory Duslo fell deeply last year and the Czech chemical factory Lovochemie is also approaching zero.