Ovostar reports preliminary 2014 financials, updates output guidance

Ukrainian egg producer and leading manufacturer of liquid egg products, Ovostar Union (OVO PW), estimates its full-year 2014 revenue at USD 74.9 mln, a 8% yoy decline, according to an updated company presentation made public on March 3. Final figures will be available on April 16.



Ovostar estimates its EBITDA, net of the effect of the revaluation of its biological assets, at USD 26.3 mln. This is 4.7% less compared to the same metrics of 2013, but 4.5% more in local currency terms. The company estimates its revaluation gain at about USD 3 mln in 2014, compared to USD 8.6 mln in 2013. With these gains included, Ovostar’s 2014 EBITDA would be close to USD 29 mln, or about 20% weaker yoy.



Ovostar estimates its 2014 bottom line, net of biological assets revaluation, at USD 23.1 mln, which is slightly more than a year ago, in dollar terms. The company’s net debt increased slightly to USD 7.0 mln as of end-2014 (from USD 4.9 mln a year before). Recall, last month the company announced completion of talks on a EUR 14.5 mln syndicated loan to finance its capacity expansion program.



The company also presented its update on expansion projects, having planned to reconstruct eight laying hen houses in 2015-2016 to increase laying hen capacity to 7.0 mln by end-2015 and 8.0 mln by end-2016 (from 5.8 mln currently). Based on the capacity expansion plans, Ovostar guides egg production of 1.25 bln units in 2015 (+20% yoy) and 1.60 bln units in 2015 (+28% yoy).



Alexander Paraschiy: With its low leverage and continuing expansion of capacities, Ovostar is one of the safest and most promising investments in the Ukrainian universe. Its core drawback is its high focus on the local market, which negatively affects its USD-denominated P&L currently, due to the heavy devaluation of the hryvnia. At the same time, we expect the company, as well as other egg producers in Ukraine, will be able to adjust local egg prices in UAH terms to offset most of negative effect of the devaluation on dollar-denominated sales. Based on the latest state statistics, shell egg prices surged 77% yoy in January, and we expect the inflation to continue.

Источник: Конкорд Капитал