Astarta Holding PLC (AST) Earnings Call Transcript & Summary

Good afternoon, ladies and gentlemen. My name is Pawel Wieprzowski. On behalf of Wood & Company, I'm delighted to welcome you to the fourth quarter conference call with ASTARTA's management. The company is represented today by Mr. Victor Ivanchyk, CEO; Mr. Victor Gladkyi, CFO; and Mrs. Yuliya Bereshchenko, Director of Business Development and IR. Gentlemen, congratulations for the results. The floor is yours.

Thank you, Pawel. We are pleased to present our annual results for 2020. And we start our presentation. Hopefully, everyone can see it on your screens. It is Slide #3. We discussed the key P&L items by noting that we reported slightly lower revenues on account of lower sale volume from the agricultural segment. As everyone knows there was a low harvest in Ukraine last year, and that affected our sales volume in this segment. There was also a slight dip in the soybean processing revenues, while other segments were performing either flat like cattle farming or increased the revenues on the sugar side. If we are talking about our margins, you can see significant expansion as the rally in the soft commodity prices offset lower yields in Ukraine. And the gross profit margin was up from 20% to 29%. EBITDA grew accordingly by almost one half to EUR 113 million. Also for the benefit of investors, we show our margins on a net of biological assets IAS 41 effect. And on a cash basis, you can see that the expansion was as significant on a gross margin basis from 23% to 27% and EBITDA margin up 25%. Going to our P&L -- from our P&L to the balance sheet and the cash flows. As we guided last year, we are focusing on maximizing our cash flows and deleveraging our balance sheet. And this allowed us to repay significant part of our loan book. On a cash flow basis, that was nearly EUR 90 million. And our covenant on a net debt-to-EBITDA basis is -- sorry, not the covenant, the ratio is 1.1 as opposed to 3.5, which was at the end of last year. So we are pleased to report that our focus on maximizing cash flows from operations as well as tightly controlling our cost and CapEx, resulted in a very healthy balance sheet. Moving on to the segment details. One can see the volumes of crops and the realized prices average for the year in euros. We can see this segment continues to be our key export revenue generator, 80% of revenues from crop sales were from exports. You can see also an expansion at the gross profit and EBITDA margin. We also single out our cash flows related to land leases so that you can appreciate how we control this part of our costs, which are now recognized under IFRS 16. But nonetheless, for predictability and consistency, we do show it as a separate line. If we are talking about our key operational highlights, obviously, the weather conditions in last year in Ukraine affected us along with all of agricultural producers. So we unfortunately had a much lower -- late crop harvest, and this is corn and sunflower seeds and soybean, while wheat, which is a winter crop, was not affected as much. We continue to modernizing our agricultural fleet. We are on track in our 5-year program to replace machinery with the new units. We have a strategic program with John Deere. And this year, we continue to modernize the equipment, which will allow us to achieve significant savings on all kind of resources, whether it's human, fuel cost or the time, which is required for the planting season. As you have seen from our press release, we started the planting season on the 4th of April, and we are successfully progressing. We are very focused on not just replacing the machinery, but improving, technologically, our operations. Several years ago, we launched Agrichain project, which is a unified IT system for controlling all agricultural operations from field operations to land management, crop and monitoring of the plantings. Last year, we established a partnership center to force the relationships with independent farmers operating in our region because we would like to increase procurement of crops from those farmers for our own processing with regards to soybeans and sugar beets, but also from other grains such as corn and wheat for trading purposes. Also last year was the year of our first harvest of organic crops. That is quite modest at the moment under 4,000 tonnes. However, the process of certifying agricultural operations as organic takes several years, and we are pleased to report that we successfully piloted this kind of production. If we look at the market environment, it was quite favorable for us from the second half of last year. And despite a slight dip in the prices for corn and wheat at the end of the year, the price rally continues and allowed us to achieve good results. With regards to our outlook and strategic focus. It remains intact from last year because of coronavirus situation globally. And in Ukraine, that was not the year to consider any big moves, but to preserve the continuity of the operations, to ensure the safety of the employees and to preserve market transitions in generally. So we are #5 agricultural business with a land bank of over 220,000 hectares. We remain the largest sugar beet grower. We are looking at our pilot organic crop farming as something we can scale up in the future. Our storage facilities, which were finished last year, sufficient, not just only for our needs, but we are looking forward servicing the needs of other farmers and also building up trading operations on this basis. We continue to fine-tune the technology of crop growing. 100% of our crops are covered by remote monitoring. We continue to optimize our land resources. And also we closely follow climate change development and try and adaptation options, which are relevant to our farming assets. Among the options that we utilize currency is precision funding, which allowed us to save on resources, supply these resources directly to the plant that we grow. Our lower density of [indiscernible] helps us to get more moisture delivered to its particular plant. One of our key agricultural operations in the Poltava region, which is over 45,000 hectares have been practicing [indiscernible] for over 2 decades. And this is one of the conservative [ spillage ] technologies, which allow us to preserve moisture and the quality of soil. We are facing the drought of last year, we also focused on purchase of drought-resistant hybrids, and we also increased growing of winter crops. In addition to winter wheat, last year, we introduced rapeseeds into our crop rotation mix. And this year, we will be expanding acreage under rapeseeds. Moving on to the sugar segment. We are pleased to say that a combination of growth in the sugar price, finally, after 3 years of surpluses globally in Ukraine, combined with our assets to reduce growth and optimize the asset base resulted in a surge of our profitability. It was a 3x increase on the gross profit margin, and EBITDA margin recovered from single digits to 17% last year. We retained our leading position in the market with 20% share, despite lower production volumes because of the lower harvest in Ukraine. And almost all of our produce, which is 99%, is of the highest quality sugar, which is valued by the industrial consumers, which is our core business focus. Looking at the market environment, unfavorable weather conditions last year affected sugar beets, and the harvest was down by more than one [ feet ]. That resulted in even a lower number of operating sugar plant during last autumn season. And that created a more favorable pricing environment for the Ukrainian sugar prices. We can see on the graph, the green line is the sugar price surge compared to the global benchmarks. The global benchmarks were also up significantly, however, lower harvest in Ukraine resulted in higher price growth. The Ukrainian government became concerned about potential sugar shortages and they initiated -- imports of raw cane sugar and a quarter negotiated long time ago under WTO agreements with Ukraine. Talking about our plans for the future, we consider the current level of consumption of sugar in Ukraine relatively stable. Therefore, we would like to keep our position in the market with a 20% share. As mentioned, our core business model is based on serving the needs of industrial consumers of sugar, these are food processing and beverage companies. And in order to serve their needs better, we, last year, optimized our asset base and now concentrate production on core 5 sugar plants, which allows us to achieve lower cost and better margin. Moving on to soybean processes. The revenues were slightly down on account of lower processing volumes. That was also a reflection of the lower harvest in Ukraine last year. However, the pricing situation was also favorable. There was an increase in product prices of soybean meal and oil at the end of the year, and the price value for soybean oil continued this year. And this allowed us to expand our EBITDA margin despite the situation when there was a lower harvest in Ukraine, while there is a huge global demand for Ukrainian soybeans and there were significant volumes of exports. Cattle farming, we continue to focus on our profitability in this segment after a remarkable turnaround in 2019. We continue to optimize our herd. We focus on higher yields and higher profitability. The pricing situation for the co-product milk was also unfavorable at above the EUR 300 per tonne. However, feed prices were affected by soft commodity rally. Therefore, the margin, unfortunately, had to come down. If we are talking about our strategy outlook in the medium term, we will continue to focus on active working capital management, maintaining CapEx at maintenance level, while there are challenges on the climate change side in Ukraine. We would like to retain our positions in the core segments we operate, whether it's agriculture, sugar, soybean processing. We would like to consider expansions on a selective basis, but while the situation, macroeconomically, is quite challenging in Ukraine because of the COVID pandemic still not under control, we would like to be on the cautious side. What we would like to provide more explanation during this call is probably the question that everyone is asking us about the next stage of the land reform in Ukraine. We show our acreage on the crops. We announced a plant -- the start of the planting season and largely in our crop mix remains the same, safe for the introduction and expansion of rapeseeds. And land being our key assets is something that we pay special attention on the basis of our lead relationships with the small landowners. From July this year, it would become possible for private individuals in Ukraine to concentrate up to 100 hectares of land. And we, as a company with foreign shareholders, are not eligible to participate in the first stage because only private individuals can do it, but also when concentration can be done at the level of legal entities. In Ukraine, from 2024, it is not possible for us to participate because we have foreign shareholders. However, the government announced its intention to hold the confirmation referendum once the market starts operating and the initial concerns of public are resolved, we believe that the situation can change. But in the meantime, our focus is on securing loan leases for our land assets. And we are pleased to report that more than half of our land bank is in the long-term contracts with landowners, and this is 5 years and over. We believe that for us, as an operator of agricultural activities, it is important to have a long-term use right of the land, and it doesn't necessarily mean ownership. Also, what we initiated last year, and this is something, which has become quite a hot topic is the issues of ESG. We took it to the next level. Our company has been reporting on the GRI Standards for 4 years already. But last year, we initiated an independent rating by Sustainalytics, which is one of the global leaders in ESG issues. And we received a rating at the level of 32.6. And among agricultural segments, we came #3 among almost 90 companies, which are rated by the global agency. This is all for the main part of the presentation. You can see updated information that we put in appendices for the newcomers to our calls, you can see the company's track record financially since it became public in 2006. And our key assets and statistics, our structure of shareholders, of our debt portfolio and the key AGM matrix. With this, Pawel, we can go ahead with the Q&A.

[Operator Instructions] We do have one question on the line. I just want to make sure that there aren't any questions from Pawel before going to those questions.

If I may, I have, in fact, a few questions. First of all, thank you so much for the presentation. Let's start with the most recent political development in the Eastern Ukraine and Russia. It seems that the tensions have been escalating. And do you foresee any potential risks associated with the military or political unrest between Ukraine and Russia and any potential negative impact of these events on your logistic chains? Have you ever encountered any problems with logistics over the last 7 years when the conflict started?

Thank you for your questions, Pawel. We, indeed, went through a very difficult period together with our country back in 2014 when the military conflict was at its hottest phase. Assuming that it was a local military conflict restricted to particular areas in Ukraine, we did not have much exposure in terms of our observations to these areas. We used to have a small sugar plant in the [indiscernible] region, which is the closest from our asset point of view to be a problem area, but it has been from last year. So from production side, we do not anticipate any exposure. If we are talking about general logistics of delivering our products on procuring from overseas, we also do not expect any disruption if it is restricted to the eastern parts of Ukraine because we mostly work with Black Sea ports. So 7 years ago, the events were affected Mariupol, but this is not a key sea port for our agricultural produce.

Okay. So assuming that it will not escalate and encompass further territories, it should be quite useful on your operations and production cycles. My next question regards the land reform. You have produced a very nice chart in the presentation on the land back, on the land reform assumption. Are you not concerned that under such circumstances that you are, in fact, prevented from any direct land purchases, you will be exposed to a risk that someone else will just steal your farmers by offering them better leasing conditions? Or just simply they may sell the land to other individuals who will not be either to extend -- land a new contract with you?

Yes. If we go to this particular slide, actually was designed in order to provide assurances to our investors. If we tackle 2 questions separately, the first one, whether anyone can try to offer a higher lease price and in [indiscernible], our long-term use of land, we believe that the rent relationships and general, the land lease market in Ukraine, is quite mature. So the lease rates were increasing in the past quite significantly, but they plateaued recently. So this market is already very competitive. And in order to pay a higher rental price, one needs to have the level of operational efficiency and margins to justify such a higher cash outflow. So if we look at our outflows, actual cash we pay for using the land, you can see that the numbers are in the range between EUR 31 million and EUR 34 million per year, and this amount has been largely flat because there is already a well-structured market and market rates for land leases. So we do not believe that this could be a significant spread. Second issue is whether the land we are using and leasing under contractual terms can change hands. From this point of view, we do have confidence in the robustness of our lease contracts because on the current loan, the liberalization of the market was not designed to ruin business models of established agricultural operators. The landlord can change hands, but the lease agreements will stay intact to provide continuity of the operations. So we believe that for duration of the land lease contracts, we are in a more or less comfortable position. Therefore, we are just focusing on [indiscernible] and extending the leases to have a longer-term horizon for such relationships.

So you are not assuming any direct land acquisition even if it is possible following the referendum that will be held in 2 years' time?

Sorry, Pawel, can you speak to the microphone, I couldn't get this question.

Is it better?

Yes.

Okay. Cool. Once the referendum has happened, assuming that the result is positive for you as a company with foreign shareholders, if you have a chance to purchase the land directly instead of leasing it, will you be interested in direct purchases of land?

It really depends because we certainly will not get engagement to any speculative stage of the market. We've seen the developments in other markets and rental agreements are still very much significant share of markets in the neighboring countries. Also depending on the prices, we will have to consider what would be the return on such an investment. And until there is a clear market price, we cannot do proper calculation. This is why it is actually quite good for us to see the stage development and opening of the market so that we can see the transparency and the price formation and in which direction the market is going. So we have a few years to do our calculations and see if it will make sense.

Perfect. You've managed to reduce your leverage significantly over the last year. Do you see now space for dividend payments or share buybacks that would be larger than the ones that you used to have? That's the first question. The second, which is connected with this one, what is the comfortable level of leverage you would like to maintain going forward to specify whether it regards the adjusted net debt-to-EBITDA or just net debt to EBIT?

Well, first part of the question. Yes, we wanted to demonstrate to our shareholder community that we did not have a debt problem despite the breach of covenant. We managed to get it under control and more than under control. We believe that we are in a very comfortable position. Now, also with regards to our past practice to do share buybacks. So we heard from investors over the last several years, the desire to see the dividend. And this is something that given our position today, we will consider. But there is -- this is something that still has to be considered by our general meeting. And at the moment, all we can say that we are in a comfortable position in terms of our leverage for such consideration. Okay. It is difficult for me to take more than one question. Can you remind me of the second one?

Yes. The level of profitability and the level...

Oh, yes. Yes. So end of last year, we now have 1.1 leverage on a net debt-to-EBITDA basis. I think the industry standard to have safe levels on the 3, 3.5. While we are in a stable position as a business and do not plan any major expansion, we believe that we will be at the current level of net debt-to-EBITDA leverage. However, if we see a good opportunity and financing, we may increase our leverage, but we don't have any immediate plans for that.

Okay, cool. One of the key reasons of ASTARTA delivering last year was a material improvement in the cash conversion cycle down from 200 days in 2019 to 120 in 2020. What should we expect going forward, taking into consideration the current soft commodity prices? Will be eager to sell as soon as possible, all the crops you have taken into consideration the high prices or you're just prefer to wait? So the question is, in fact, about your cash conversion cycle in 2020, especially inventories management.

There are 2 parts to the answer. First one is regarding the commercial policy. And indeed, the soft commodity price value means that some people would like to wait and see and sell even at a higher price, which we see what are -- the farmers are doing or sell faster. I think generally, in Ukraine with regards to large-scale businesses, there is already an established practice. And the market for forward contracts, whereby the large players are trying to presell half of their harvest in advance. And we are not exclusion to this practice. We also deferred half of our harvest. However, this is only a part of the explanation regarding our cash conversion cycle because, one needs to look at it from the point of view of our revenue structure on a pure segment basis. The nature of our business, for example, in sugar, is that we process sugar beet into the product over just over 2 months in the autumn. And then we have a stock of sugar, which we sell on a monthly basis to the industrial consumers and into retail over the year. However, this is not the case with milk, which is sold immediately and also soybean crushing. As we crush beans into soybean meal and oil, we almost immediately sell the produce. This is round-the-clock operation. So part of the faster cash conversion cycle is not just related to our [indiscernible] sale of harvest, but also to a decreased share of sugar segment in the overall cash conversion of the business.

Perfect. Last question from my side. Have you hedged your prices in the agri segment for 2021 and to what extent?

All right. So can you speak slower and into the microphone, please?

Sure. Sure. Last question from my side. Have you hedged prices in your agri segment? And to what extent for this year?

I think I answered this question. We presold half of our grain harvest already and forward contracts are indeed, the most popular type of hedging in Ukraine.

Our first question from the phone lines comes from [ Melos Risko of IRSN ].

Okay. Congratulations for the strong results in 2020. We all hope and believe that 2021 will be even better. My first question is kind of a follow-up to the last question of the Pawel. So just to make it clear, when the company started to hedge the 2021 harvest?

I'm really sorry, but we don't disclose our commercial book. We can provide a general guidance. And I believe I answered the question by saying that we resold half of our harvest. But we're not in position to disclose our daily volumes of prices.

No. No. I don't want to ask for the daily volumes, just like did you start maybe in November or December, that would be enough.

The general practice in Ukraine that the harvest is presold before at the time of planting.

Okay. That will be good. So I have other few questions. So I'll go one by one. So did the company already sold the soy products from the own harvest by the end of 2020?

Have we presold -- no.

No, no, no, no. Yes. I'll repeat. It's just...

Okay. Forward program, we are talking about this is with regards to our grains. What we sell in the soybean processing segment or in the sugar segment, this is more driven by spot prices.

Yes. So the question was because I know that like only portion of the production of the soybean processing is from your own crop. So did your own crop was already sold by the end of '20 or not? If you can disclose it, obviously.

If you look at our financial report, you would notice that we do not have any sales booked externally from selling soybean. This is because we process our own harvest at our processing facility. So if we look at our harvest last year for soybeans, it was 63,000 tonnes, but the volume of beans processed last year was over 200,000. So this is...

Yes. That's why I ask if you sold to third parties, soybean products? Or your was a significant portion in the fourth quarter, in particular?

Sorry, in the fourth of last year?

Yes. Should I repeat the question? Maybe I can explain it better.

Yes, please.

Yes, because obviously, your capacity for the crushing of the soybean exceeding significantly the products of crops that you go with. So the question was, do you start the season with crushing your own soy? Or do you first crush the soybean from the third parties and you wait until the later stages of the season to crush your own soybeans?

Again, this is a round-the-clock operation. We crush for 11 months a year, 1 month, the plant is closed for maintenance. So as we receive our own harvest of soybeans, we process it. And it's never 100% our own harvest or 100% third parties'. There is always a mix that our own beans and third-party beans because our own harvest is only a -- is a much smaller part of the intake.

Okay. So another question that will be about the soybeans. Do you see a significant drop in crushing margins in 2021 due to the small harvest in Ukraine in the previous season?

Certainly, this is much more challenging year for Ukraine soybean crushing segment because the harvest was much lower. However, there are attempts, at least what we hear from the market, that there are attempts to import some soybeans into Ukraine, and that could come down price growth for soybeans. This is something that was attempted last year, and we believe this is something that some players consider this year. Not us, because we have our own harvest. But if there is any import into Ukraine, that might improve the crushing margin by lowering prices for this bean.

Okay. And so can you disclose maybe what will be the percentage of the utilization [indiscernible]

I'm really sorry, the line was bad. Can you repeat the question again?

Yes. Yes. So do you have already maybe some predictions to what will be the percentage of utilization of the soybean processing plant this season?

Well, obviously, that will depend on the harvest in Ukraine. What we can see from projections by the Ministry of Economy is...

I'm sorry. I mean, the current season, so until the next harvest.

Until the next harvest. Difficult to say because we report on -- not on the marketing year basis, but on a financial year basis. So we do believe that we will crush over 200,000 tonnes in 2021 anyway.

That's great information. Okay. So that would be enough. So I have another question. So what is the utilization level of the silos that you have by the third parties?

It is very difficult to specify a separate room for third parties in our silo facilities. The capacity is 550,000 tonnes per year. And if we take a turnover, too, this is enough to serve our internal needs, which is 1 million tonnes of grain and oilseeds. However, if we can increase our turnover to 2.5 million, that would create a room for almost 400,000 tonnes to serve third parties. Also, if we sell our harvest faster and we keep it for shorter period of time in our storage facilities, that creates even more rooms to service third parties. So it all really depends on the market situation because we would like to obviously time sale of our harvest at the most favorable price terms for our own harvest. And then if there is a room in the storage facilities, we will serve third parties. Also, as I mentioned, we -- last year, we started doing some trading activities. You can see it in the volumes of corn and wheat. And this year, we would like to make up to 0.5 million tonne trade in grain. And this is also linked to our capabilities in terms of storage and handling.

Okay. So this is really good news. So we can expect that the sales of the corn, for example, will be bigger than what was the harvest in the last season?

That was already the case last year, if you compare our production in sales volume.

But this year, obviously, [indiscernible] it will get better. So it may have a bigger influence, but this is really good news. So I have the last question, so I will give some space for other people. What is the usual time lag between contracting and sales of sugar that you procure?

Between contracting and sales of sugar?

Yes. That's -- for example, you can make a contract for selling a certain amount of sugar, but the delivery is, let's say, some 2, 3 months later. What is usually the time lag between the agreement and the physical delivery?

It is very individual and different between the 2 segments we are serving. As explained, our core segment is serving food processing beverage companies, the industrial consumers. These industrial consumers require a certain quality of sugar, which is quite high quality because it is used for industrial production. And we have been fine-tuning our technology and the processes to specifically produce this quality of sugar for them. And we have experience and relationship with these consumers for several dozens of years. Therefore, with such consumers, we typically conclude so-called framework agreements, which, in general terms, fix the quality and quantities of the product. And then these consumers announce tenders on a periodic basis for suppliers to provide their bids. So we -- the price is always lagging by the time the tender is conducted. Also these periodical tenders could be at a different period for industrial consumers. So sugar prices are mostly spot prices. They move with the market with insignificant lag. So there is no pool in discussing what is 1 month or 2 months, the [indiscernible] of the price adjustment is much more frequent.

Okay. So you don't have like the annual contracts or like half-year contracts?

We have all kind of the contracts, but all I'm saying -- I explained to you the general business setup is that framework agreements with long-term customers.

Our next question comes from [ Randon Carmel of AS Management ].

As [indiscernible] commented on the CapEx, which should stay on the maintenance level, can you please comment on what is, from your perspective, the level of maintenance CapEx?

Thank you for your question. As a general rule of thumb, maintenance CapEx should not be lower than normal depreciation. However, if you would like to model anything, I would like to draw your attention to Slide #5, where we single out land lease depreciation, which is almost EUR 20 million per year. And you should take into account that this is not -- this should not be counted towards maintenance CapEx. So our CapEx is -- was last year under EUR 20 million, and we do not budget anything higher for this year unless we have some fantastic investment opportunity. But in the long run, you can look at our level of depreciation minus land lease depreciation.

Okay. And so you don't expect under normal circumstances, that you would need, I don't know, after 1, 2, 3 years, there will come some extraordinary CapEx?

No. And I will explain it probably on a per segment basis. Obviously, in agriculture, the main asset is land. The machinery and equipment is actually not that expensive. We have managed to update part of -- a significant part of our lead within a 5-year program and CapEx is EUR 10 million. If we are talking about sugar segment, you can see also CapEx has been reduced significantly. And this is because we actually reduced our asset base and the 5 core sugar plants that we operate was already invested at a very high level in order to get to basically 100% of our production at the A quality grade sugar. So this was a recent investment more than EUR 10 million in 2018 alone. So we do not anticipate anything significant in this segment. If we are looking at soybean processing, this is a very new plant. It was launched only in 2016, which is almost 5 years ago. As a new asset, it doesn't require anything in the short term either. And cattle farming is also not very capital-intensive business. So most of the CapEx you saw before 2020 at a higher level than EUR 20 million per year was related to our storage facilities, which we built over the course of 3 years. Other than that, the maintenance CapEx is quite low.

I understand. I have also seen in your presentation that in terms of sugar beets, you want to maintain, let's say, the level of planting. And there was a comment until you see a sustainable, let's say, recovery of prices of sugar. So could you comment what kind of price levels you are talking when you would consider increasing the sugar beet planting and, let's say, production?

Yes. This is not really probably above the level of price, but the long-term sustainable picture as a sector in Ukraine. The Ukrainian sugar industry is subject to WTO treaties, which were concluded back in 2006, which protects the market with a 50% import duty, but leaving space for 260,000 tonnes of raw cane sugar import into Ukraine. We believe that this arrangement is probably obsolete because it was concluded at the time when Ukraine used to consume more than 2 million tonnes of sugar. Today, we see the consumption levels at a much lower mark of 1.3 million tonnes. Therefore, when we are talking about sustainability, we are talking about the long-term picture for the sugar industry in Ukraine, but also for the industry globally. As you can see from the graph in 2016 and '18, consumption was already at a lower level in Ukraine, but because the global prices for sugar were at a much higher level than last year, Ukrainian producers were exporting over 0.5 million tonnes of the product. But since the global prices became lower, exports almost stopped and everyone is focusing on the domestic market. Therefore, in order to increase acreage on the sugar beet and increase production, we would like to see growth in consumption in Ukraine or a higher global price, which will motivate us to export.

And so the higher global price, you mean, for example, above $500 per tonne or something like that?

Yes. Generally, if we look in the past before the 3-year price pricing globally in the sugar market, the 10-year average before then was around EUR 500 per tonne. So that was sustainable 10-year period before the most recent crisis globally in the sugar market.

I see. And just last question from my side. I have noticed that you will be also quite successful in OpEx reduction and number of employments [indiscernible] people was going down last 3 years. Is this somehow connected to the reduced capacities into sugar? Or is it general, let's say, focus on more lean production going forward as well?

It's more second about delay in production focus. We do have operational efficiency program, which has been running for several years by now. Also, this is about more productive agricultural equipment. The machinery that we replaced in the agricultural segment requires less human resources. It is more optimized, GPS-driven, et cetera. So the head count can be reduced from the technology point of view as well.

We also have a question from Jakub Szkopek of mBanku.

Congratulations with the great results for the fourth quarter and 2020. I've got a question regarding the selling of the sugar beet in Ukraine in 2021 that's already started. What is your forecast for the selling in Korea for this year? I heard that there's enormous craze about [indiscernible] sunflower seeds from Ukraine. Do you think that maybe there's the selling of the sugar beets could drop below 200,000 hectares?

Sorry, your question was quite long, but is it about reduced acreage under sugar beet because of the expansion of sunflower seeds?

Yes, exactly. And other...

Yes, okay. Okay. Actually -- well, sunflower seed certainly is something that is in expansion in Ukraine, at expense of which, growth is still a question mark. But given the prices for sugar at the second half of last year and currently, we believe that the farmers will probably increase acreage under sugar beet. The increase cannot be very significant for technological reasons. Sugar beet as a crop, is very specific in terms of growing technology. So the acreage is largely fixed at the autumn. There is not much flexibility to change the crop mix in screen now at the planting -- at the time of planting in terms of the sugar beet acreage. We know that the Ministry of Economy officially estimated acreage at 227,000 hectares. We believe it's a stretch. We do see the acreage flat from last year, but we don't believe it will be reducing because the sugar prices are quite good domestically and the farmers are motivated to grow it.

Okay. I've got one additional question regarding the sugar that you produced. After the third quarter, you said that you aim to preserve the same cost, unit cost in 2021 or either it could be lower. But I see that the sugar beet yield was lower in ASTARTA in 2020 and also the content of sugar was lower. What is your opinion right now? You'd be able to sustain the unit cost of sugar in 2021? Or it could grow because of this worse weather conditions?

Right. The cost of sugar production, 2 major drivers. One is, of course, the sugar beet and another one is natural gas. None of these 2 components are known currently with any deal of certainty, but we can look in the past. And we do believe that last year was extraordinary in terms of the weather conditions to the extent that it should not really repeat and the yield should normalize together with the sugar content. So our harvest was low last year, but the sugar content for us, specifically, was actually quite decent. The unit cost you are discussing now in terms of the sugar content, that already relates to the sugar process in months already behind us, last autumn. What we are looking forward is this year, we started planting sugar beets already this week, and we are looking forward in new harvest. In terms of the acreage, which we already announced, just to refer to the slide, sugar beet acreage is 33,000 hectares, which is similar level than last year. But we do believe that the yield should normalize together with the sugar content this year.

We also have a question from Marcin Nowak of IPO Securities.

Three questions from my side.

Marcin, can you speak up, please?

Yes. Now it's better?

Yes, much better.

With regards to the sugar balance for the next season, '21, '22, with potentially slightly increasing sugar beet area with a potential rebound in sugar beet and sugar yields from 2020 results. And this threat of import of sugar beet -- of sugar to the Ukraine, how do you see the sugar plants for the next season '21, '22?

Thank you for your question. I believe we regularly discuss this issue internally and externally. And there is official position, the Ministry of Economy recently published that for 2021, at least, they would like to see 120,000 tonnes of raw cane sugar import in order to create stock by the end of this marketing season. We believe that the sugar balance is difficult to estimate in Ukraine because the end in stocks are not accounted in a precise way. And also the second unknown is the local consumption. There is always plus/minus 100,000 tonnes of sugar in stocks or in the consumption, which is the number we believe not accounted by the official statistics. So the acreage expansion is not major. Going back to 220,000 or slightly above is just 5% growth over the last year, acreage of 216,000 hectares. And that should -- if there is a normalization of yield, that should roughly result in the amount of sugar, which almost matches domestic consumption at 1.3 million. However, balance is always affected by the end in stocks. And we believe that the Ministry announced imports, the desired import on raw cane sugar depots, they would like to see a higher level of stocks at the end of '21 season.

Okay. And with regards to the recent announcement of antimonopoly proceedings initiated against ASTARTA, do you consider this as a potential legal risk going forward? Or do you expect any outcome out of this?

Well, to be honest, we don't take it emotionally because we see it as a routine job for us to provide all required information to the Antimonopoly Committee. As we mentioned in our press release dedicated to this topic, even last year, we already provided data to the Antimonopoly Committee 4 times. Therefore, the recent announcement was actually -- there was no need to make such an announcement because we regularly provide all the information. Also, we noticed that this announcement was made as a warning to all food producers because it said that the Antimonopoly Committee will start with the sugar prices, but will not limit itself to investigate in the sugar market, they will move on to other food products. So if you look at the bigger picture, we believe, generally, the government and the Antimonopoly Committee are concerned with the food price rally, which is not limited to Ukraine, it is global. And all governments are concerned by potential price hikes and the consequences for their population. So we believe that this is our routine job. We'll provide all the information. And in the past, once all the data was provided, all issues were resolved, and we never had any significant problems.

And last...

Hello? Hello?

My apologies, it seems that the individual asking the question has removed their request to speak. [Operator Instructions] We did get one question via the chat box function, if you're happy for me to read that out quickly to you.

There is buyback program [indiscernible]

Yes.

We always roll over permission for a buyback for several years. It was only the past year, we were restricted because of the breach of the covenants. So this is something that we were always doing on a small scale. And before, it should -- there are no obstacles to continue it this year because of our leverage, which is at low level currently.

Thank you. We have no further questions.

Well, in this case, thank you very much for your questions. It has been a pleasure to explain our results. And we are open to any further inquiries should you have once you have an opportunity to study our annual report in more detail. Also this week, we are scheduled to announce our AGM agenda. We also will be providing a trade update. So please, keep tuned up, and we hope we will have more good news for you this year.