Astarta improves EBITDA, bottom line in 1Q15

Ukrainian farmer and leading sugar producer Astarta (AST PW) reported a 30% yoy decline in its revenue to EUR 56.4 mln in 1Q15, according to its quarterly report released on May 12. The decline was mostly caused by a 49% yoy devaluation of the Ukrainian hryvnia, the key currency of Astarta’s operations, against the euro. In local currency terms, the company’s top line advanced 48% yoy.

In EUR terms, revenue in all its segments declined except a new one - soybean processing – which jumped 90% yoy to EUR 18.8 mln. As a result, Astarta has become a leading soybean processor in Ukraine in 1Q15 with a market share of 25%, according to the company report. Astarta expects its soybean production in Ukraine will increase 15%-20% yoy in 2015, which will be supportive of its processing plant’s raw materials sourcing. The company is purchasing more than 50% of its soybeans for processing on the market.

Sugar and sugar products remain the key segment for Astarta, generating EUR 28.9 mln in revenue for the company in 1Q15 (-41% yoy). Volumes of sugar sold decreased 18% yoy to 59 kt, according to the report. The company highlights that area under sugar beet sowing in Ukraine has decreased 28% yoy in 2015 to 235 kt. This might allow for higher sugar pricing from the remaining producers on the market.

Astarta’s gross profit improved 18% yoy to EUR 43.9 mln on decreased COGS and flat yoy IAS 41 gain, and its EBITDA improved 7% yoy to EUR 41.9 mln. Better operating income and smaller foreign currency losses (down 16% yoy to EUR 59 mln) enabled the company to reduce its net loss by 33% yoy to EUR 28.9 mln in 1Q15. The company’s net debt decreased 10% yoy to EUR 210.7 mln as of end-1Q15, and its net debt to LTM EBITDA fell to 1.7x, down from 2.9x a year before.

Alexander Paraschiy: Devaluation of local currency, which effectively devalued the costs of Astarta’s last harvest, seems to be the key reason for its improved profitability in 1Q15. Stabilization of the local currency in 2015 will, therefore, play to decrease the company’s gross and operating margins in the coming quarters. This might be compensated by higher profitability of its new soybean plant that will work at full steam this year, better sugar pricing on an expected significant decrease of domestic supply in 2H15, as well as the results of the company’s energy efficiency efforts. An expectedly stable hryvnia over the rest of the year enables us to expect no new foreign currency translation losses in the upcoming quarters, which improves the chances of Astarta posting a positive bottom line in FY2015. All in all, we remain cautiously optimistic about Astarta’s value growth potential in the short term.

Источник: Конкорд Капитал