Problems for agriculture: Fix points out the financial risk of other large firms

The truth is that the current scenario is affecting large, small and medium-sized companies alike and this in turn is a a faithful reflection of what the agricultural producer who today works with negative margins for most crops must face.

In this framework, The risk rating agency Fix focused on firms such as ALZ Semillas, Metalfor, Fuhrmann and Atanor, all with negative outlooks or in “Rating Watch Negative.””. The fact is that they face a large short-term debt in a complex context for the sector. Of course this does not mean that they will necessarily suffer the same fate as Los Grobo, Agrofina or Surcos, it all depends on the management of their finances.

ALZ Seedswhich is dedicated to marketing and distributing seeds, based on exclusive agreements and alliances with leading companies in the sector, with revenues of US$13 million as of September 2024, accounting for the partial period for six months, suffered a year-on-year drop of 59%, attributed to a reduction in the area planted with corn and adverse weather conditions. In this framework, as of September its debt amounted to US$18 million, with US$17 million concentrated in the short term, exhibiting tighter liquidity.

In any case, according to management information as of December 12, 2024, the company reported cash and current investments for US$10 million, added to the lines available with banks for the aforementioned US$12 million. Likewise, the company presents the possibility of concentrating commercial debt with its main seed supplier for up to US$ 25 million for a 365-day term, having alternatives that give it financial flexibility.

ALZ Semillas’ ratings, granted by FIX, remain at A-(arg) with a negative outlook. In this framework, the rating agency warned of a possible increase in leverage and a reduction in operating margins if the situation does not improve in the coming months.

Another firm under pressure is Metalforone of the main manufacturers of agricultural machinery in the country. The company closed September 2024 with a financial debt of US$89 million, of which 90% matures in the coming months. This maturity profile poses strong financial stress– The risk rating agency also assigned Metalfor the A(arg) category with “Rating Watch Negative”, basing its decision on the high concentration of short-term debt. Despite the challenges, the company showed a rebound in machinery sales during 2024, with a year-on-year growth of 43% in units sold, thanks to an improvement in the climate situation and new commercial strategies.

“The growth of short-term debt is impacted by different reasons, including the expiration of the previously issued ON in the next 6 months added to a greater need for working capital due to an increase in the company’s sales and the decrease long-term financing offer in the market. Fix understands that this situation can generate financial stress in the short term, given the maturity profile of the obligations in the short term. In this context, it is expected that in the coming months the company will extend the maturity periods,” explains the risk rating agency.

In turn, Fuhrmana leader in the processing and export of wool, also faces a complicated outlook. The company reported a significant drop in revenue due to lower international demand and currency fluctuations. In this framework, Fix assigned a negative outlook and was based on the deterioration of the sector and the growth of its debt, reaching US$ 11.7 million as of September 2024 from US$ 1.9 million in December 2023. The debt corresponds to pre-financing of exports at low rates (against future flows) and corresponds mainly to debt cancellation with producers.

In return, The leading company in wool exports from Argentina has behind it the powerful Schneider Group (also known as Société Européenne pour le Financement d’Initiatives Textiles, which owns 100% of the share capital of Fuhrmann. This group has an international trading network, with offices in Australia and New Zealand, and first-stage manufacturing of fine wool, cashmere, silk and precious natural fibers, which it supplies to the best spinners and weavers in the world. Schneider is such an important and relevant company in this market that supranational organizations such as the IMF usually use this entity’s statistical surveys for their reports on the wool sector at a global level.

For its part, Athanorone of the main producers of agrochemicals, experienced a more than complex 2024 as a result of the increase in operating costs and the drop in local demand. In this framework, Fix lowered its rating to category A(arg), Rating Watch Negative, from category A+(arg), Rating Watch Negative. The decline is based on the company’s tight flow generation capacity during 2024 derived from the closure of the San Nicolás plant for much of the year, lower sales levels due to a significant overstock in the industry added to other factors. macroeconomic with negative impact on the prices of their products.

In turn, The company increased its debt to US$202 million for December 2024 from US$153.6 million at the end of 2023 both due to the subscription of Bopreal to cancel commercial debt and due to a decrease in its flows due to higher costs. On the other hand, as detailed by the risk rating agency, Atanor reported that the group’s support continues in terms of financing and they will be able to refinance their debts with suppliers (which are mainly the group’s for US$120 million) during the next year.