Avangardco 1Q15 EBITDA plunges 90% yoy and 73% qoq

Ukraine’s largest egg producer Avangardco (AVGR LI, AVINPU) reported a 52% drop in revenue for 1Q15 to USD 72.4 mln, according to its May 29 earnings release. The decline was driven by a 16% decline in shell egg sales and a 55% yoy plunge in dry egg product sales to 3.2 kt, as well as by a 33% yoy decrease in the average selling price of eggs and a 25% yoy drop in egg product prices, all denominated in USD. The company’s EBITDA plunged 90% yoy and 73% qoq to USD 6.4 mln, driven by an increase in the production costs of eggs, the company said. The bottom line came in negative at USD 52 mln, compared to a profit of USD 46.8 mln in 1Q14, as a USD 45.7 mln ForEx loss exacerbated the company’s lackluster performance.

Avangardco’s net operating cash flow came in negative at USD 3.3 mln in 1Q15 compared to a positive of USD 39.0 mln a year before. The company partially compensated its higher receivables by boosting payables, though it experienced a USD 8.9 mln outflow for working capital purposes. Total debt stood at USD 339.3 mln as of end-March 2015, almost flat compared to December 2014. 78% of the total debt was short-term, and 59% of the debt was Eurobonds maturing in October 2015.

Roman Topolyuk: These figures are quite disappointing, especially in light of the company’s upcoming scheduled repayment of a USD 200 mln Eurobond. It has been clear that Avangardco’s two options are to refinance or restructure the debt facility, as the egg producer lacks own ability to pay, yet the question is about what the terms will be. With the company being able to generate EBITDA of USD 122 mln in 2015 (-6% yoy), as based on our most recent projections, Avangardco could repay 25% of the bond in 2015 and shift the maturity of the remainder to future years, avoiding haircuts on the bond. Yet if the 1Q15 earnings become the new norm, the holders of 2015 notes should be prepared for a distressed scenario. We expect management to give some guidelines at today’s conference call.

Источник: Конкорд Капитал