Milkiland EBITDA drops 27% yoy in 9M14

Revenue at diversified dairy producer Milkiland (MLK PW) declined 9% yoy to EUR 224.1 mln in 9M14, the company reported in its quarterly earnings report on Nov. 14. The company attributed the decline to the devaluation of the Ukrainian and Russian currencies and a ban on cheese exports from Ukraine to Russia. The ban caused revenue from Milkiland’s cheese and butter segment to fall 30% yoy in 9M14 and 45% yoy in 3Q14. As a result, the company’s whole milk products became its flagship segment as its revenue rose 4% yoy to EUR 105.2 mln in 9M14 (and fell 2% yoy in 3Q14).



The same shift happened in the geographical distribution of Milkiland’s business: its Russian assets became the core revenue drivers (+18% yoy in 9M14) and main contributors to total revenue (52%). This was a result of Russia’s ban on milk products import from the EU, which decreased competition on the Russian dairy market. At the same time, Milkiland’s Ukrainian assets, focused on more value-added cheese and butter production, continued showing a double-digit EBITDA margin: 14% in 9M14 (down 4pp yoy), compared to 6% for Russian assets (up 2pp yoy), remaining the core contributor to the company’s consolidated EBITDA (raising 66% of the total).



The revenue decline of its Ukrainian segment, as well as higher raw milk prices in Russia (which reportedly rose 23% yoy), caused Milkiland’s total EBITDA to fall 27% yoy to EUR 19.9 mln in 9M14, and 44% yoy to EUR 6.4 mln in 3Q14. The company’s net loss amounted to EUR 34.9 mln in 9M14, attributed to EUR 41.9 mln in currency exchange losses. Its cash flow from operating activities amounted to EUR 5.3 mln in 9M14, which was an improvement from EUR -5.2 mln in 9M13.



As of end-September 2014, the company’s total debt stood at EUR 106 mln, driving its debt-to-equity ratio as high as 2.4x from 1.5x as of end-2013. Out of total debt, EUR 100 mln was classified as being repayable in the next 12 months. The company reported it failed to meet some debt covenants, including keeping its debt-to-EBITDA ratio at below 3.5x. The management commented on its ongoing debt restructuring talks, expressing hope on closing the deal with lenders by the end of 2014.

Источник: Конкорд Капитал