Astarta increases revenue 8%, EBITDA 84% in 2014

Ukraine’s leading farmer and sugar producer Astarta (AST PW) has posted a set of strong results for the year 2014, according to its annual report made public on Apr. 10. Its revenue increased 8% yoy to EUR 351.9 mln, fuelled mainly by the introduction of a new segment - soybean processing. The new segment has generated EUR 74.2 mln in revenue (21% of total). The company’s export revenue has increased 26% to EUR 84 mln (23% of total).

The company increased its gross profit 61% yoy to EUR 130.9 mln. The main factors responsible for this were: a smaller pace of cost inflation (mostly linked to the local currency) as compared to output prices growth (which correlate better with dollars), an increased added value of its products (via soybean complex commissioning), and increased cost efficiency (including the introduction of biogas production). The key contributors to the company’s gross profit were: sugar segment (EUR 47.8 mln, +94% yoy), the new soybean segment (EUR 21.5 mln), and IAS 41 gain (EUR 47 mln, flat yoy).

The company’s EBITDA increased 84% yoy to EUR 119.6 mln, while cash flow from operations increased 2.4x yoy to EUR 93.8 mln in 2014. Due to foreign currency translation losses of EUR 135 mln (mostly on revaluation of the company’s debt portfolio), Astarta posted a EUR 68.1 mln net loss in the year (vs. EUR 22.3 mln net profit in 2013).

The company has managed to decrease its net debt by EUR 48 mln to EUR EUR 216 mln as of end-2014. Its net debt / EBITDA ratio amounted to 1.8x as of end-2014, down from 4.0x a year before.

In the year 2015, the company is planning to focus on securing the stability of its business, and reaping the fruit of its past investments. At the same time, Astarta “will be looking into potential growth opportunities” as well.

Alexander Paraschiy: The result is definitely a positive suprise that should be rewarded by stock market in the coming days. A relatively low financial leverage seems to be Astarta’s core benefit that may allow it to improve its market positions on domestic farming and sugar markets in the year 2015. We expect that the exit of its main competitors from the sugar market (Mriya, Ukrlandfarming) will allow the company to continue benefiting from strong domestic sugar prices. Despite that, we expect that Astarta will show flat or slightly declining revenue in 2015, primarily due to devaluation of the hryvnia, Astarta’s core currency of operation. At the same time, we expect that the company’s past projects directed to increased energy efficiency as well as its newly launched assets will help improve Astarta’s gross and EBITDA margins this year.

The only sign of worry is Astarta’s debt repayment schedule: its amount of short-term debt and the current position of its long-term debt is EUR 145 mln, which exceeds the company’s annual operating cash flow. In the past, the company had no trouble in refinancing its short-term loans. However, in the current political environment it might be not that easy, as the experience of other large Ukrainian companies suggest. Though, given the company’s strong image, we do not expect any problems in taking short-term financing, if it needs to.

All in all, we remain cautiously optimistic about the prospects of Astarta’s stock for the mid-term.

Источник: Конкорд Капитал