Ros Agro PLC (AGRO) Earnings Call Transcript & Summary

Happy to see you at the web conference of Ros Agro Capital Markets Day. My name is Svetlana Kuznetsova. I'm Head of IR. And today, I will be moderating our event. The presentation will be run by Maxim Basov, CEO of the company, and we also have our CFO with us, Boris Chernicher. Let us start with the presentation, and it will be followed by the question-and-answer session. You can ask your questions in writing using the Zoom Q&A function or you can speak when you raise your hand. The conference is being recorded in both languages, and it will be available on the company website for a couple of days. Now over to Maxim.

Hello, ladies and gentlemen. Today, I would like you -- to update you on the current status of our company and where we would like to go. Let me start with the current structure of the company. And then I will elaborate on the market and industry development around the world and the place our country and our company has in the market. We will talk about the pillars of our investment case, and I will share some ideas as to where the company is going to and where it will be going to. And the current situation in our segment is. Let me remind you, it is Page 5 of the presentation that our company is a diversified vertical integrated agricultural and consumer company in Russia. Our revenue is about RUB 200 billion. EBITDA of LTM exceeds RUB 40 billion, margin, 22%. We have 20,000 people in our headcount. And our leverage is only 1.6x, that is net debt to adjusted EBITDA. We operate in 4 segments and all of those 4 segments are of strategic importance for us currently. Let us start with the largest one. In terms of revenue, it is Oil and Fats business. Oil and Fats business is a comprehensive business for us. It consists of 3 subsegments. The largest one is extraction. The next is consumer segment. And it also includes dairy products and vegetable milk. The third segment here is Industrial Fats. On the second business by revenue, is usually either Meat or Sugar. Meat business is also made up of 3 paths, that is live meat processing and processing of meat and meat products. Another large business of Ros Agro is Sugar business, it is a normal business that precedes the feedstock into sugar. And one more business, the largest in terms of needs for financing is our Agricultural business. It produces various crops in the domestic market. Let us start with the Agricultural business now. Well, let us call it Agriculture for short. Russia has a significant place in the agricultural market. There is a number of crops that are really good and profitable to produce in Russia. Russia and Ukraine, these days, is a cost leader, first of all for wheat. And besides, there is a good position with barley and sunflower. By volumes of production, Russia is one of the leading countries. For example, in wheat, we are #4. And in wheat exports, we have been #1 for a couple of years now. We have a very good position in barley as well. The production in Russia is growing, first of all. It is due to improving market environment and investment in technology. Recently, the segment saw some considerable investments and the yield has grown a lot in Russia, especially in the European part of the country. Of course, all years are different. In some years are better, some years are worse, but if we take the average for the latest 10 to 7 to 3 years, we can see a growth in production. And we can see that it is set to continue, while in some other countries, our competitors due to the climate and its negative impact, the growth will not be so high or even declining. So in fact, the Russian Federation is really well positioned here. The agricultural production will be growing, cash cost for some crops will be going down, and the business will enjoy a really favorable position. In the latest years, the prices for food products have been quite high overall. And you can see the price here was $244, recently, for wheat. And we can say that it hit the highest USD 305, USD 307 at the peak. The companies cannot use the good market environment to the fullest, though, the government imposes some limits and restrictions. There are duties applicable to almost all the crops, that despite the duties, we still managed to earn quite a good profit. The next page shows that in Russia, there are several companies that work on large areas of land, more than 0.5 million hectares. Our company is among top 5 landholders in the country. And we can see that in Russia, the prices for grain, despite the duty are quite high. And we believe this market will be further developing. We will tell you later the way we are going to develop this segment going forward. The second segment I would like to talk about is Oil and Fats. We process soybean and sunflower in extraction business. In industrial fats, we also process other oils, such as palm oil, we imported these days. In consumer fats, we produce products. In terms of further processing, we produce sources based on vegetable oils. We also produce spreads and butter and cheeses, including cheeses with no milk or palm oil added. Basically, Russia is really very much competitive here as well. In sunflower oil, Russia as well as Ukraine, are dominating the exports from the world. Russia is also an exporter and second largest producer of sunflower oil. The positions of Russia will be strengthening as the areas where sunflower growth are expanded. The yield will also be higher. We will be more -- we will have more capacities for processing soybean and so on. Generally, the consumption in Russia is growing quite slowly, while the production is growing very fast, which results in higher exports, of course. Prices for Oil and Fats are also at a very high level. First of all, it is due to high consumption levels of oil. Oils are consumed by some fast-growing categories, among large categories, all in all. On the other hand, some countries are facing problems with production because of the labor deficit due to COVID. The palm oil is growing in terms of price and sunflower oil has a premium to palm oil because it is one of the fastest-growing products in the Asian countries due to its consumer properties. As I have mentioned, Russia takes an important place in production and in export and Ros Agro is also on leading positions in Russia in this industry in terms of production of sunflower oil, we are #1. As for oils generally, we are either at #1 or at #2. We have just published the data for the latest season today. We do not have exact data on our peers for comparison yet, but we shall see. We also have a very strong position in industrial oils, that is #2. As for mayonnaise and consumer margarine, we are on the leading position in Russia. Now some words on sugar. The future, by the way, of Oils and Fats is really good. We are a leader in cost. Russia pigs, We are growing the volumes and the yield no major limits on export. However, there is a duty on oil. We will be paying 70% with a price above $1,000 to the government starting September 1. However, even this measure doesn't prevent us from making profit. Sugar. Sugar is not such a fast-growing industry around the world. Last year, there was a drop in consumption even after a number of years. This year, we have been observing post-COVID recovery to an extent, Russia is not among top 5 of producers. We are #7. This is because we do not produce in sugar. We produce sugar beet and sugar beet-based sugar. Its cost is a bit higher. So Russia is a leader in sugar beet-based sugar. And according to our estimates, thanks to good agricultural practices in sugar beet, Russia is among top 5 countries with the lowest cost of vertically integrated sugar, which is a really good result. The price for sugar has been growing recently. Now it is between $0.18 to $0.20. It is the highest level of late 7 years. And of course, it is also quite attractive for producers. On the next page, you can see that Ros Agro in sugar industry. In Russia is #2 in terms of production with a share of 13.5%. Prices for sugar are currently at a very good level. The price today is higher than in the recent 2 years. For some time, we had price regulation in place. But currently, there is no price regulation. However, there are subsidies when we supplied sugar to retail chains at the price of RUB 36 until the 1st of October. We are also subsidized. We are part of the arrangement to help the government constrain inflation. Upon the whole, Russia is #1 and has been in sugar beet sugar production. It resulted in a drop in prices. Some businesses had to close down. But this year, the situation has been really stable. The production of sugar is approximately the same as consumption that is 5.8 million tonnes, which makes the market really stable and well balanced. Next, pork. In pork, we have achieved some very good results in Russia as well. Today, Russia is #4 around the world in terms of meat production, and it has a competitive cost of pork. We are a net exporter of pork already. We are only #9 in exports that we have been growing steadily in Russia. Russia is unlikely to catch up with large countries producing pork that have privileged relations with the tightness, that is China, Japan, Korea and Mexico. But anyway, Russia is exporting quite a lot of pork overall like 50% of the Vietnamese market. The production of pork in Russia is growing this year. It will most likely exceed quite a high volume already, but now there are a lot of discussions because of the African swine flu. Maybe this growth will not be as high as expected but anyway, we hope that in the coming year, due to the project in progress, the production in Russia will grow by another 15% to 20%, we believe. Upon the whole, around the world, pork has a very strong place that is 1/3 of consumption volumes, 34%. 2 categories have been growing a lot recently that is poultry or chicken and pork. And Russian pork consumption is record high at this stage. Pork prices are quite high, but there is a trend for decline recently. This is because of the situation in China. In the next page, you can see that last year, the growth of production in Russia was 9%. This year, like I told you, we expect it to be about the same. But actually, we expect Russia to produce 4.3 to 4.5 tonnes -- thousand tonnes, Ros Agro's, 5% to 6%. And what is the overall condition of Ros Agro. We are at an important stage of our history. We are facing a new stage. We can see that external factors are quite favorable for the development of the sector and development of Russian companies overall. I would like to add that the situation is about as follows for us. We have 2 businesses where our products are highly competitive and not so much limited by any trade restrictions. This is Oil and Fats segment and Agriculture segment. And in the other 2 industries, we have good positions in costs that we cannot fully unlock our potential in terms of growing sales and production due to market restrictions in effect due to some reasons. These are the Meat and the Sugar businesses. Today, we are completing quite a lot of CapEx projects that have been on in the preceding 2 stages of our development. First of all, we were focused on the domestic market. There were some subsidized loans. And we are now at the completion of this stage, we are doing it successfully and what awaits us, I will tell you a little bit later in more detail. First, as I told you, we are a large company, one of the largest in the CIS in our segments, that is Food and Agriculture. We are not a part of any large international company, but we are quite well diversified, which allows us to be resilient amidst huge volatility, trade volatility and political volatility, our financial position is quite robust. And if there is a slight decline in one industry, the growth in other would be observed. Our businesses are well interconnected in this regard. Over the recent years, we have built some really successful assets. They are very competitive. But for our only asset in Primorye is that this Primorye soybean which is quite old, our assets all either new or have been refurbished really well. They are located in the regions, reaching feedstock, which enables us to be competitive under any conditions, be it climate or anything else. Next, vertical integration enables us to show good efficiency and low costs. We have located our processing facilities close to our fields, which enables us to save on logistics costs. Logistics is a really important part of our overall cost. And with the shorter distance, they are not so high. We have managed to automate our large agricultural production. This year, we are completing the key stage of our automation efforts, and we will be moving forward, including technology development, which I will elaborate on a little bit later. We will be developing technology in 2 areas: digital transformation and management; and technology associated with the production process, biotechnology, first of all. That is microbe synthesis, selection of crops and plants with microorganisms in the soil and so on. I think those efforts and the climate that is improving in the zones where we operate, not across all the country but in the zones we are present. And we think that these sectors will enable us to increase our margins without our -- any major investments. But of course, it is subject to external circumstances as well. We will be further developing our consumer products. We have achieved good success everywhere, but for agriculture, which is quite new. In other 3 segments, we have very strong positions, such as Oil and Fats, both in Russia and Asia. We sell our products to China, to Europe. We are an absolute leader in sugar in Russia. And as I have said, we are strengthening our positions in consumer meat. Now we are #4 there, but our target is to be among top 3 in any segment. The Russian market is regrettably not growing in our products. That is why we will have to be further developing our exports. Our growth will be based on exports and we are already exporting a lot. Over the last 2 years, we increased the volumes of our exports. We are exporting to 61 countries now, our Oil and Fats business is most export-oriented. We exported 45% of our products. Sugar business is #2 in exports, 20% in total sales last year. Next Agricultural business, 19% of exports in total sales and Meat business 13% in total sales. In Meat business, export will also be growing in the future. We have very good experiences, not only of organic growth, but also M&A growth. Almost each year, we saw large transactions. So the 2 most recent years, was largest in the industry. We buy the companies RAZGULAY and Solnechnye Produkty, some products. And we will keep buying more assets. However, we are really disciplined. We only buy assets that guarantee us highly probable returns that we need, given our cost of capital. We think we will have further opportunities of good M&As going forward. Due to these developments and trends in our performance, we have a very strong financial position. Last year, we had record high financial performance. This year, our financial performance will be even better. There are some good expectations for the full year 2021, taking into account the completion or ongoing completion of our large CapEx projects. Our net debt to EBITDA is at a more comfortable level now, it dropped to 1.6x, and I think we will keep paying some really good dividends. Today, the Board of Directors made a decision to increase the minimum payout of dividend to 50%. Over the recent years, we paid the dividend at this level and even higher. Today the Board of Directors is quite confident that we will be able to further successfully develop and pay these announced. An important work stream for us will be this year and beyond ESG and sustainable development. We are now working on a comprehensive strategy to communicate to investors that our business is really ESG focused. We are really competent in our operations with soil and plants. You know how important plants are for oxygen and other useful substances. They also absorb carbon dioxide. And we expect that next year, our key ESG metrics will be audited by external auditors, and we will be able to show to investors how useful our production is for the nature and for the community as a whole. We are building up a professional team over all these years. It is not a family business or anything. We have professional managers. We believe we are a leader in the industry. Our team is very strong, and we will be further reinforcing the team going forward. What is key in terms of our development today? First, it is business expansion. We see some good opportunities for organic growth and for M&As. In Agriculture, for example, we will be further automating our business and developing technology. We believe we will be able to increase our land bank. There is some speculative agitation about land, and we expect it to recede that even if it doesn't happen, we will be able to expand our land bank to 600,000, and our target is 1 million hectares. We are going to further modernize our production facilities, the assets that have already been launched and those that are underway will increase our pork production and crops production. In Oil and Fats, we are thinking about building new capacities. And we -- the growth of yields in our Agriculture business, we believe, will improve the production at our assets. And with the same assets, we will be able to produce more sugar. Next. B2C in terms of generating value, it will not give that much effect as expansion of competitive assets. However, there is also potential here, not only in Russia, but also abroad. We are a large -- one of the largest players in Asia, in Central Asia. And we have been successfully growing in those countries, and we think there is some huge potential in the market of China. We are working on expanding there in our Oil and Fats, and we are planning to expand our presence in the Chinese market overall. Next page, yet another important strategy pillar for us is further automation and innovation efforts. We believe that in our conservative technology -- in our conservative industries, the technology is still developing really, very fast. We have our R&D projects. This year, we approved several big R&D projects already. There is a competition of start-ups in progress across Russia and some other countries, and we are looking at solutions that we would be able to potentially employ in our operations. I think it will support our competitive edge going forward and at the same will enable us to further reduce costs. A couple of words of the current situation, again, recently, we disclosed the results of quarter 2, as I told you, the performance in quarter 2 was really good, record high. We improved revenue and EBITDA indicators across all the segments effectively, almost across all of them. And let me update you on the situation of each of the businesses briefly. In Agriculture, we harvested early grains on the corners left. Harvesting will start in October. Now we are harvesting soybean and sugar beet. We can see that yields across all the crops are a bit lower than last year. This is true, not only for our company, but for the industry upon the whole. However, we see that the situation is really favorable in terms of prices. We are happy -- very happy with our financials this year. And our objective in agriculture now is to go on, working on automation and technology development. Besides, we will seek to buy land at the prices that would be reasonable. The previous season was really successful, record high results. And sometime soon, we will launch our factories. Our assets, they were on hold that for a short time this season. We will start the new season soon. We will be working, taking into account new export duties. But however, we are confident that we will be able to utilize our capacities as the utilization rate is the highest in the industry for our company. And so we will be able to earn quite a lot as well. despite the export duties, I have already mentioned that prices are quite good, and we are sure we'll be positive. In Sugar, we have started a new season, and we expect really good results, mainly the results in this season will be defined by the high global prices for the product. It is the highest over the last 7 to 8 years, as I've mentioned. And we hope there will be higher yield of sugar beet, which will enable us to produce more sugar and sell more sugar in term to domestic and international consumers. In Oil and Fats, we are in a situation with high prices currently. The prices are high in Russia, first of all, because quite a number of companies, producers of poultry and pork suffered. First of all, from African swine flu, that they also suffered from the hot season. The prices are high. And they have been on this level for quite a while. We have -- we believe the volumes will be sufficient to get some really good results. The prices for grain are a bit lower currently than in the same period for 2020. Our company is optimistic, overall, about our development in the coming years. We have a really strong background, good balance sheet and a good balance between segments. We have strong R&D, and we believe that the growth in production that we expect to have, despite the external factors, we will be able to reduce cost, and we will still keep our shareholders happy with high dividend. Thank you. Now over to the Q&A session.

We have not seen any questions in writing. So we'll be happy to take your questions verbally. [Operator Instructions]

Hello? [ Linnet ] we can hear you.

My question is a bit personal. Sorry for that, that there has been some rumor recently about CEO potentially leaving. I think it is quite an important thing for investors. So the management has brought the company to some big success. So could you explain also clarify the situation.

Regrettably, I cannot tell you anything more. I can say that any company's CEO may leave at a point in time, it's but normal Ros Agro is very strong and stable. I have been in charge of the company for 12 years, I have been creating it, that -- should I be willing to leave, it wouldn't be -- it calls for any issues. If the Board of Directors decides on a successor, it would be the right person who would manage the company successfully. We cannot say that this is happening right now. My contract indeed about to expire. And in the Board of Directors, we are now discussing various options. Once a decision is made, we will communicate it to the market immediately. Anyway, I believe, I am able to ensure good succession. Anyway, I will still be part of the Board of Directors. The company is really, very strong, and the track of its further development is really well defined strategically. We have a similar strategy approved by the Board of Directors. It is very clear and very understandable. It is very clear that if we are in line with our strategic targets, the company will see further growth. I wouldn't worry here. And I wouldn't do anything that would deteriorate the situation at Ros Agro being its shareholders. This is the only thing I can say.

Another couple of questions. As to the prospects, you have described quite a lot of plans for further development that if we look at financials, it is understood the prices are changing a lot. If the prices remain unchanged, which of the new projects underway? Well, being moderately optimistic, what organic growth could you expect for the nearest future for the nearest years, for as many years as you can speak about.

We have mentioned in the presentation actually. And if we tell you more, it would be risky for us because the environment is really volatile, and we would hate to mislead you or misinform you somehow. If you take a look at the final page of the presentation, that is Page #29, it shows that we are planning to increase our land bank to 600,000. I can say that the overall objective is 1 million hectares, as set by the Board of Directors. So you can see there is a strong increase in production to be expected, the same is true for Sugar. You can see the approximate figures. And I can say that in the past, we have always exceeded our target, at least in the previous years, thanks to M&As and other things.

But what could be an approximate average annual growth should the prices remain unchanged? Here, you can see the figures, but it is not quite clear what for your growth rate.

If it were clear, we would communicate it to you. I wouldn't be as outrageous as to assume that the prices will remain unchanged. Unfortunately, there are too many factors beyond our control.

Okay. Do you have any clear guidance for the second half 2021?

Regrettably, we wont to be able to answer your question. As I told you, we believe that this year's results will be record high in quarter 3. We will publish our results for quarter 3 in November. Please wait for further communications. And overall, the situation is favorable so far. Thank you very much.

Over to Miroslav Andreas. Looks like there are some issues. Let us take another question from another participant over to Nikolay Kovalev. Nikolay, could you turn on your mic, please? Nikolay, unfortunately, we can't hear you. Let us take another participant's question. Over to Alexey Krivoshapko.

A question, if we turn back to the page that is currently on the screen, we would like to understand in terms of CapEx for those expansion plans in terms of volumes. Could you shed more light on Oil and Fats, Meat and Sugar in 3 separate answers, how much money you would need for expansion of production? Meat is -- it includes Primorye as well, right? And as for Sugar, could you give us overall figures, I don't think you will be able to split it in years. But as -- and as for Agriculture, what is your approach to buying land, what would be the IRR that you expect when you buy land for us to better understand in terms of CapEx, how much this growth will cost. And yet another question about your free cash flow based -- once the latest data, what is your overall maintenance CapEx that is to make sure everything is in good work in order?

Thank you very much for your question. Let me start with Meat segment. Currently, the situation is as this follows: the construction of new assets, but for one currently out of the large assets that we have been planning for, everything has been already completed only the asset in the Primorye region is now facing the last stages of completion. So we launched a number of assets, but there are some ongoing investments that will seize only next year. I think in Meat the amount we still have to invest. Well, it is really difficult to announce an exact figure because we do not know how much we have already invested exactly, but to complete all the assets, it will need maximum RUB 15 billion, maybe RUB 10 million. The situation keeps changing. This is about Tambov and Primorye. In addition, we are planning for only one new CapEx project. We haven't announced it yet that the Board of Directors approved it, and we are starting the design. In Primorye region, we will be creating consumer products production, including a project with our Japanese partners, but the amount of CapEx is not that big RUB 1.5 billion at maximum. In CapEx and maintenance, the total amount will not exceed RUB 15 billion in the Meat business, I think. As for Sugar, we are not planning for any new CapEx, but for maintenance. Everything has been well invested and the increase in production is due to more sugar beet to be produced. In Agriculture, new investments may be associated only with buying new land and the rest is just maintenance. Buying new land, our approach is we want the purchases of land to pay back that is in a conservative forecast with discounted cost of capital at 15%. Because of that, we cannot buy some land plots that we wouldn't want to risk because we believe these days, the market may be overheated. It's the peak of the cycle, so it would be too risky to buy some land at the peak of the cycle. In Oil and Fats, we have several projects, more than other segments. But we have managed to expand our factories without major construction. So far, the investments are not so big. The total CapEx is about RUB 3 billion. We have 2 projects for constructing oil extraction plants. They are quite big. We haven't made the final decision yet. So I wouldn't like to scare you right now. What it means for us, I think, this year, our overall CapEx will be at about RUB 20 billion, a record high in history of the company. Next year, our CapEx plan is at RUB 15 billion to RUB 18 billion. And beyond 2022, effectively, we do not expect any major CapEx, but for maintenance CapEx that we estimate to be maximum at RUB 10 billion. That is RUB 5 billion to RUB 10 billion. This is the plan. And of course, the management would want to offer more projects with good returns to the Board, but in the current situation because the construction costs are high, steel prices are high, labor force is expensive. So this is not for today. We believe that some companies will not be able to bear the volatility, and it may be easier for us to buy something than to build something on our own.

Understood. So if we sum up all the current government initiatives in terms of curbing the price growth. What would it look like? There are these emergency duties, so to say, introduced for grains and oil. Was there communication -- was there any communication by the government on sugar. Will they be canceling the duty? And was there any communication in -- by the government in terms of pork. Don't you think they may introduce some additional export duties on pork to stabilize prices?

Unfortunately, it is difficult to say something after the December message made by our government. It's a new reality. It has been a new reality since then. There is an active government role. And we do not think it is always reasonable. But well, it makes things difficult to forecast. We believe that there will be no major new regulation in our industry. What has already happened will be effective for some time. There is a high duty, 70%, so to say, on sunflower oil that -- anyway, we still are able to generate profit. And we expect that the duty for crops will still be there about 70%. But for soybean, where it is 20%. I think it will be our reality for the near future and all our factors -- forecast factored in. So we do not think any major regulation on pork. The prices for meat in Russia have started to go down. And so I think we'll manage. In pork, we plan to introduce quite a lot of capacities next year. And I think next year, the price for pork will be much lower than in 2021. We do not expect any additional interference from the government. The meat prices will go down and that's it. And as for sugar prices, since the market is well balanced. Actually, there is a big difference between domestic and export alternatives. And as for exports and the domestic price, it's about RUB 45 and the export alternative is RUB 45 to RUB 47. This is no more than 10% of the allowed increase in prices as imposed by the government. I think the prices will be stable, nobody needs a conflict these days, and we do not expect any additional measures to be taken by the government This is what we factor in our planning.

Okay. And one last question, if I may. You have this 10% discounted period of return and other pains of Russia as for imported products, the dairy products, for example. Doesn't it make this business more attractive for you at this stage?

We are part of the market already. We have a small dairy product business that we do not see any huge potential in milk processing. The key factor is Belarus, first of all, and then huge investments have already been made. There are a lot of plans and they do not pay back. So we are not planning any investments in our CapEx and milk processing. But there are some niches where we would like to be developing. We still believe that there are big prospects for vegetable cheese. And we are actively looking into it. We think there are good prospects for other litigable dairy products. The prospects are good because the cost is low. We are also developing dry mixtures, dry wafer expert that those assets, they do not require any major CapEx. We are not planning for any major CapEx in them. Because regrettably, many other players in the market, in their symptom, which actually brings down value. As for raw milk, we think it is complicated. It depends on the government subsidies too much as the government is prone to changing its opinion. The price for milk in Russia is quite high, and it may go down. So we believe you'd better use your land, not for food grain for your milk cows, but for other crops, for example, soybean and wheat have very good prospects. We are not planning to invest in milk.

And as for growing beef as a commercial product, have you been thinking about it?

We keep looking at this, but it needs cheap money for a long term and a lot of land. We do not see any opportunities in beef production these days. Theoretically, it would be a good business for companies bordering China. But again, it needs cheap money for a long term and taking into account the risks, climate risk, government policy risk, china. We do not think that this business is attractive.

And my last question, maybe, beyond Russia, have you been thinking of going anywhere with your production?

Yes, there has been some heated debate in the company about that. I believe our company has some good technology to create interesting production assets beyond Russia in the countries that need this production. But these projects, none of them have been approved yet. So we have been thinking about it, but there are no specific decisions.

Over to Marat Ibragimov.

I have a question based on mass media reports. So they say, in the far east, you have set up a company that will be in stone business. So you are not expanding into production of construction materials, I hope.

Well, what -- the mass media report is true. Production of construction materials for construction is not our business, though it is a good business. We are not looking into it. We setup this entity to deacidize Primorye oil sooner. In Primorye, there is some land, but there are limits to achieving good production results in near future. So the soil is acidized and it will need a lot of years to bring the level of acid to some optimal level. So what we get is powder that contains calcium. So for that, we need to take stone crusher and apply it to soil to deacidize it then it takes 7 to 10 years for the soil to become of the quality that we need. This is no major investment. This is just a way for us to increase yields in the future.

And next question. Could you shed more light on the rumor on your SPO. That is -- what do the key shareholders think about it? Are there such chances?

It is not unlikely. The company doesn't need capital. Of course, we are paying dividends. We paid USD 120 million to date, and we plan to keeping dividends, I'm not planning to sell any shares today. That's the only thing I can say.

Okay. As for prices evolution across all the segments, it is better than you expected at the beginning of the year. And so what about your guidance for profit and EBITDA? They shall be improved, but you are conservative and you are not reviewing your guidance for EBITDA and profit. You are saying it will be as good as in 2020 in the year 2021. Could you give a more optimistic guidance?

We have never given any, and we are not planning to. The situation and the environment in our business is too volatile. And the result in EBITDA may be better this year than in 2020, but almost the entire second half of the year is ahead of us. The last 4 months of the year are usually very good for us, but there is government regulation. There is ruble rate. There are duties, a lot of factors. We expect record high results that I wouldn't be any more precise than that.

And my last question, it was also typed in the chat about your technology innovations. What operating metrics you would like to achieve? What targets? And what will be the impact on your EBITDA and other financials?

We have some figures in mind, but I think this information is highly sensitive. I can only give you some overall information. Those new technology projects do not require any major CapEx at least at this stage. And going forward, we will be investing RUB 0.5 million to RUB 1 million in each of the project. No more than that. We have quite a number of projects. That's what I can say. With Skolkovo, there is a startup that we are working on. And the technology we have selected with the Board of Directors, I am keeping an eye on those projects and they are aimed at changing the existing processes. What I can currently say, in Agriculture, in crops, apart from automation projects that are successful. And next year, we will offer a platform to the market that we believe is interesting that is for remote evaluation of crops. There are some other technology projects in progress. Anyway, well, we are working on improving yields on some projects in sugar beet. In the Far East, there will be soy. It is added to the list of crops on the government research program. There is a dedicated project soybean in Primorye. There are some reasons for it. In Oil and Fats microbe synthesis of some products and also various biological technologies, we are actively researching projects associated with alternative protein such as insect-based or mushrooms-based and there are some marketing innovations as well that we are working on. We are looking at vegetable substitutes for meat. In sugar, there are also some breakthrough ideas that we are discussing associated with sweet products.

Does that have additional properties for the consumer?

I will not go into further detail that this is about what we are working on, those projects do not require any major investments. The Board of Directors has been really conservative about these new projects. But on the other hand, we can see that there are good research teams in Russia built up in several research institutes. Most of those projects are really quick to implement, really quick to generate results.

Let us try to take the questions from Nikolay Kovalev, once again. Nikolay? Unfortunately, we can't hear him. He is with us. But due to some reason, we can't hear him. And we also had questions from [ Linnet ]. Let us try again.

[ Linnet ] and Nikolay here. Okay, we can [ Linnet ] hear now.

One more quick question. So you quoted your CapEx plans, this is minimum unless you have any major new M&As. If your plans come true, and the scenario that is currently in place, what you can say about dividend payouts going forward? So if your CapEx is in line with your plans, what could be your dividend guidance?