Kernel expectedly reports record-high EBITDA in FY2015



22 октября 2015 года
Конкорд Капитал

Кернел (KER)


Ukraine’s leading sunflower oil producer and grain trader Kernel (KER PW) reported a set of strong financial results for FY2015 ended June. EBITDA increased 78% yoy to USD 397 mln (3% below our expectations and 1% below consensus), net cash from operating activities surged 4.9x to USD 405 mln, and net profit turned positive at USD 107 mln compared to a USD 98 mln loss a year ago (we projected a bottom line of USD 96 mln, while the consensus estimated USD 133 mln).

The company’s CapEx was minimized in FY2015 to USD 25 mln compared to USD 50 mln in the prior year, and the company experienced a working capital release of USD 148 mln. As a result, its total debt declined 38% yoy to USD 463 mln, while net debt dropped 50% yoy to USD 339 mln as of end-June 2015.

Kernel provided guidance of total crushing volumes of 2.7 mmt in FY2016 (+7% yoy), though it sees its crushing margin as “normalized” next year compared to the FY2015 average of USD 187 per ton of bulk oil, as an additional 1 mmt of sunflower seed to be collected will be compensated by additional crushing capacities coming to the market. The company expects its farming segment to deliver results in line with FY2015. In the grain and infrastructure business, Kernel aims to keep annual exports at similar levels, seeing some possible decrease in grain export margins but expecting robust performance in terminal throughput.

In addition, Kernel offered a trading update for 1QFY16, revealing some moderation in operating activity. Oilseed crushing decreased 17% yoy to 418 kt, which the company attributed to lower availability of sunflower seed at the end of the marketing season and before the new sunflower seed harvest arrived. Hence, Kernel’s sales of sunflower oil in bulk dropped 22% yoy to 158 kt. Grain sales fell 24% yoy to 927 kt owing to a weak pricing environment for soft commodities, and export terminal throughput slid 4% yoy to 1.167 mmt. Preliminarily, the corn crop yield has reached 7.3 t/ha (+3% yoy, but lower than expectations due to drought conditions in August). The wheat yield declined 6% yoy to 6.1 t/ha, the sunflower yield rose 8% yoy to 2.7 t/ha, and the rapeseed yield remained flat at 1.8 t/ha.

Roman Topolyuk: Kernel’s expectedly robust operating and financial performance in FY2015 serves as the basis for transforming the company’s capital structure, with its stated aim of further decreasing leverage. This enhances Kernel’s ability to participate in a potential M&A locally, and boosts its resilience to any market volatility. We should note that Kernel reported USD 85 in EBITDA per ton of bulk oil sales in the last quarter of FY2015, whih is lower than we expected after an exceptionally high level of USD 278/t in 3QFY15.

The low crushing volume results for 1QFY16, amid the company’s projections of volumes’ increase in the full year, imply that the company will have to deliver strong capacity load throughout the rest of the fiscal year. At this stage, all business segments seem poised to report robust financials in FY2016. We are sticking to our bullish view on the stock.

Источник: Конкорд Капитал

Аналитик: Роман Тополюк


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