Kernel reports weaker 1QFY14 oil production, better harvest

Kernel reports weaker 1QFY14 oil production, better harvest



18 жовтня 2013 года
Конкорд Капитал

Кернел (KER)


Top Ukrainian sunflower oil producer Kernel (KER PW) reported 74% growth in grain trading volume to 885 kt in 1QFY14 (ending September), according to its report on October 18. The company stated that the key growth driver was the start of Russian grain trading, while its Ukraine sales volumes were weaker on a delayed harvest and farmers’ unwillingness to accept low prices. Russia operations were also a driver for Kernel’s 5% yoy higher port terminal throughput (to 778 kt) in the quarter.



The company halved yoy both crushing of sunflower seeds, to 232 kt (due to depleting sunflower stockpiles and limited availability of seeds from the new harvest), and sales of bulk sunflower oil, to 99 kt.

Kernel also reported an encouraging update on its farming operations for this season, with yields (YTD) being 22%-48% better than for the previous season. With its plans to increase harvest acreage 1.6x yoy this season, the company expects to increase its grain harvest 2.7x yoy (to 1261 kt) and oilseed harvest 2.3x yoy (to 324 kt).



Alexander Paraschiy: The weak results for the oil segment, which contributed more than 2/3 of Kernel’s operating profit in FY2012, do not look encouraging so far. On the other hand, they stemmed from mainly weather-related delays in the supplies of sunflower seeds from the new harvest, and that's not indicative for the coming full year: Ukraine’s sunflower harvest is expected to be much better this season. While we expect the company will report a yoy decline in most P&L items in 1QFY14, we see the following quarters will be much more successful for Kernel.



We believe investors should concentrate on the company’s results for financial year 2013, which it's scheduled to release in two weeks.

Источник: Конкорд Капитал

Аналитик: Александр Паращий
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