Milkiland posts 9% yoy revenue growth, net loss due to forex effect in 1Q14

Ukraine’s dairy producer and leading cheese exporter Milkiland (MLK PW) reported a 9% yoy increase in net revenue to EUR 77.3 mln in 1Q14. The key growth driver was Milkiland’s Russian segment which raised its revenue by a remarkable 27% yoy to EUR 41.2 mln. The company’s Ukrainian enterprises decreased revenue 16% yoy to EUR 30.8 mln, which is explained by the devaluation of the local currency and a decrease of cheese exports to Russia due to new restrictions (tightened customs clearance). Its Polish subsidiary’s revenue increased 2.6x yoy to EUR 5.3 mln.



Higher prices for raw milk in 1Q14 (20% higher yoy in Russia and 31% higher in Ukraine, in local currency terms) resulted in an 11% yoy growth in costs of sales; while the company’s gross profit has remained flat yoy at EUR 14.4 mln. A EUR 1.8 mln (nine-fold) yoy decline in income from government grants has resulted in a 20% (EUR 1.5) yoy decrease of Milkiland’s EBITDA to EUR 5.8 mln in 1Q14. The company’s bottom line was negative at EUR 24.6 mln in 1Q14 (vs. EUR 1.0 profit in 1Q13) as a result of EUR 27.5 mln in forex losses, due to the hryvnia devaluation.



The company also reported that the Russian consumer rights watchdog has suspended cheese imports from the company’s Okhtyrka plant (accounting for 19% of the group’s cheese capacity) since April 7, which will further trigger a decline in exports to the Russian market in 2Q14. Milkiland reacted to the challenge by adding efforts to diversify the export of its cheese and shifting to production of more dry milk products. It also counts on a decrease of raw milk prices in Ukraine due to export bans by Russia on many cheese producers. Prices fell 12% m/m in April and are continuing to decline in May, according to the company.



Milkiland is going to convene a conference call on its 1Q results tomorrow, 5pm Kyiv time.

Источник: Конкорд Капитал