Milkiland reports expectedly weak 9M15 results

16 ноября 2015 года
Конкорд Капитал

Milkiland (MLK)

Dairy producer Milkiland (MLK PW) reported a 35% yoy drop in its revenue to EUR 146.2 mln in 9M15. Its core regional divisions showed a significant sales decline, which the company attributed to devaluation of local currencies: sales in Ukraine fell 58% yoy to EUR 46.9 mln and in Russia fell 17% yoy to EUR 86.2 mln in 9M15. Milkiland’s Russian division performed much better than others in volume terms, as its biggest Russian asset, Ostankino, boosted its sales volume of whole milk products by 22% yoy, while its other asset in the country, the Rylks factory, boosted cheese volumes by more than 220% yoy. This volume growth resulted in an EBITDA surge of the company’s Russian divisions by 13% yoy to EUR 8.0 mln. The company’s overall EBITDA fell 48% yoy to EUR 9.5 mln in 9M15, while net loss deepened 9% yoy to EUR 38.1 mln, despite its foreign currency translation losses being halved yoy to EUR 21.7 mln.

Milkiland’s total debt increased 4% YTD to EUR 105.6 mln and the ratio of total debt-to-LTM EBITDA was 12.9x as of end-9M15. The company lost EUR 8.3 mln in deposits in the failed Ukrainian Professional Bank, which resulted in a 85% YTD decline in its cash position to EUR 1.6 mln and increase of its net debt by 14% YTD to EUR 104.0 mln.

The company reported it has breached several covenants under its USD 58.9 mln syndicated loan and is continuing negotiations on the loan restructuring. Milkiland is currently preparing a business review and review of its short-term liquidity forecast, expecting these documents to be finalized by the end of November. Based on these documents, Milkiland is going to reach a debt restructuring agreement with the banks by the end of 2015.

Alexander Paraschiy: Mlkiland was among the first victims of Russia’s initiated trade war with Ukraine in early 2012, as well as one of the biggest victims of another trade war that Russia initiated against the EU and Ukraine last year. Now the company’s future depends mostly on its business review and its approval by its main creditors. At this stage, it’s hard to predict whether the company will be able to preserve all its assets following this review. We treat Milkiland as a risky asset that still has a chance for value recovery in the mid- to long-term.

Источник: Конкорд Капитал


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