Jul. 17, 2018
Sumitomo Corporation to Begin Agricultural Input and Service Business in Ukraine
Sumitomo Corporation (Head Office: Chuo-ku, Tokyo; Representative Director, President and Chief Executive Officer: Masayuki Hyodo) has acquired 51% stakes in the Ukrainian general agricultural material sales companies Spectr-Agro and Spectr-Agrotechnika (hereinafter, the two companies are collectively termed “Spectr”) and will begin Agricultural Input and Service Business in Ukraine.
Spectr sells agrochemicals, seeds, fertilizer and other agricultural materials to about 3,500 farmers. Since its establishment in 2009, the company has been offering an extensive product lineup and helping to improve farm productivity by providing farmers with high-quality commercial agricultural guidance and other services, and it began sales of agricultural machinery in 2012. It has been steadily expanding its business, growing into one of the leading agricultural material sales companies in Ukraine, itself a major agricultural producer. The company’s annual sales are approximately 13 billion yen, accounting for about 10% of sales in Ukraine’s agrochemical market. Through this alliance, Sumitomo Corporation will be contributing to Spectr’s future business expansion by developing its own brand products and supporting efforts to encourage the introduction of agricultural machinery, with a target to realize sales of 25 billion yen within 5 years, which is around double of the present level.
One of Ukraine’s most notable features is its natural environment blessed with a mild climate and fertile soil. The country has an impressive 33 million hectares under cultivation, about seven times Japan’s total, and its grain production ranks 7th in the world, with its booming wheat and corn production placing it among the world’s top agricultural producers. Crop acreage is forecast to increase in future, and the considerable leeway for improving yield per unit land area underlies expectations of greater demand for agricultural materials.
Sumitomo Corporation began exporting agrochemicals in the 1960s, and entered the agrochemical import and sales business in Eastern Europe in the 1990s, including Ukraine where Summit Agro Ukraine (hereinafter, “SAU”) has been operating since 1999.We have developed this business model by expanding its product portfolio to incorporate fertilizers and seeds, and is now selling through a network that extends to 33 countries worldwide. In managing these subsidiaries, Sumitomo Corporation is developing global management personnel and using its industrial network to acquire industry-specific know-how. Spectr and SAU have had very close ties, Spectr being one of the paramount customers of SAU. This investment was realized thanks to this industrial network which SAU has accumulated in 20 years.
In Agricultural Input and Service Business, Sumitomo Corporation has acquired the Romanian agricultural materials wholesaler Alcedo S.R.L. in 2011 and bought a majority stake in the Brazilian distributor Agro Amazonia Produtos Agropecuarios S.A. in 2015. Sumitomo Corporation will be considering further expansion into other countries as well to help increase agricultural yields and ensure stable food supplies worldwide by providing services carefully tailored to the agricultural conditions and characteristics of specific countries/regions.
|■Profile of Spectr|
|Company names||:||Spectr-Agro LLC、Spectr-Agrotechnika LLC|
|Representative||:||Volodymyr Lobach (General Manager)|
|Head office location||:||Obukhiv, Kiev Oblast, Ukraine|
|Principal business locations||:||Throughout Ukraine|
|Capital||:||Approx. $5 million (figure after closing)|
|Sales||:||Approx. 320 million Ukrainian hryvnia (1 hryvnia = 4.2 yen)|
|Investment ratios||:||Sumitomo Corporation: 51%, management team and individual shareholders: 49%|
■Sumitomo Corporation’s Material Issues
Sumitomo Corporation Group positions “Six Material Issues to Achieve Sustainable Growth with Society” as an important factor in developing business strategies and in the decision-making process for individual businesses. Going forward, we will pursue sustainable growth by resolving these issues through our business activities. This project especially contributes to “the Development of Local Communities and Industries” and “Establishing a Foundation for Comfortable and Enriching Lifestyles”.