Astarta reports 1.6x increase in EBITDA, loss on UAH devaluation in 1Q13

Integrated farming company and Ukraine’s leading sugar producer Astarta (AST PW) reported a 7% yoy increase in net revenue to EUR 89.4 mln in 1Q14. Growth was mainly fuelled by the sugar segment which raised its revenue 26% yoy and contributed 50% to Astarta’s total revenue for the quarter (up from 43% in 1Q13). The cattle farming segment (milk) was another contributor to revenue growth showing an 11% yoy growth in revenue to EUR 10.7 mln. Astarta’s revenue in crop segment decreased 37% yoy to EUR 21.9 mln, which can be only partially explained by the redirection of farmed soybeans to its own processing plant. The new soybean plant generated EUR 9.9 mln in revenue as it processed 45 kt of soybeans in the quarter, thus having utilized 82% of its total capacity. The farming segment was the core contributor to Astarta’s export revenue, as about 95% of crops sold were exported, according to the company.

The company reported EUR 37.0 mln in EBITDA in 1Q14, up 58% yoy (up EUR 13.6 mln). The key contributor to the growth was a revaluation of agricultural produce and biological assets which increased EUR 12.8 mln yoy. The company stressed the good condition of its winter crops, and expects a good harvest of early grains this season.

Astarta reported a one-off UAH 850 mln (EUR 70 mln) exchange loss due to devaluation of the local currency, as about 80% of its total debt of EUR 241 mln is in U.S. dollars and euros. As a result of forex losses, Astarta reported a EUR 44.8 mln net loss in 1Q14. The company’s net debt amounted to EUR 233 mln as of end-1Q14, which is 12% less YTD. The decrease in net debt, in EUR terms, caused mainly by devaluation of the local currency (in UAH terms, net debt increased 16% YTD). Ratio of net debt to LTM EBITDA has remained unchanged yoy at 2.8x.

Alexander Paraschiy: Except for the unavoidable non-cash exchange loss, the company’s results look encouraging. The company continues to benefit from a recovery of prices on the domestic sugar market and a continued boom on the raw milk market, so we expect that its 2Q14 results will also be strong. At the same time, we expect that the second half of 2014 will be weaker, given that production costs for the new harvest should be much higher yoy, mostly on inflated fuel costs. We keep our neutral position on value growth of Astarta for the coming year. At the same time, we believe that stock market punished the company too much in 2014. Its stock fell 42% YTD vs. -35% for WIG-Ukraine index and -24% for its peer Kernel.

Источник: Конкорд Капитал