Astarta
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  • 10 April 2017 - FY2016 financial report
  • 11 May 2017 - Q1 2017 financial report
  • 11 August 2017 - Q2 2017 financial report

Business description

Astarta is vertically integrated Ukrainian agricultural company, leading sugar producer (with market share of up to 25%), soybeans crusher (market share – 20-25%) and raw milk producer. With land bank of 245k ha the company relates to TOP-10 Ukrainian farming companies.

Despite growing diversification, realization of sugar accounts for about 50% of total revenues of the company. With total production of 355k tons (in Y2015; the company operates 8 sugar refineries) Astarta is leading Ukrainian sugar producer (along with Ukrprominvest and Radekhov-Tsukor). During last two years it has been one of the most efficient companies on the market by sugar yield (more than 15% in last two seasons) and by energy consumption. Over 70% of sugar beets processed was in-house produced (there is natural restriction in sugar beets production as they can be sown on the same land once in 5 years). As for realization, because of Ukrainian market specificity, main part of sugar is realized domestically, which means certain FX risk for the company (in a view of market over-supply, export operations in Y2015 were more sizable than usual accounting for close to 12% of total realization).

After launching of soybeans processing complex in the beginning of Y2014, in same year the company already became the largest soybeans crusher in Ukraine. Close to 200k tons of soybeans has been processed in both Y2014 and Y2015. Export accounts for about 50% of total realization in the segment (Y2015), as for supplies, crushing operations of Astarta have been (in Y2015) by 65% secured by in-house produced soybeans.

As Ukrainian raw milk production market is largely fragmented (industrial share of production is still below 30%), with market share of slightly higher than 1% Astarta is leading raw milk producer in Ukraine, being rather efficient from milk yields point of view (more than 6.5 tons per cow per year in Y2015). Because of focused sales in the dairy segment on domestic market, its performance is also (similar to Sugar business) subject to FX risk, at that the segment remains important factor in vertical integrated business structure of the group, consuming in-house produced soybeans meal and waste from sugar beets processing and supplying organic fertilizers to farming operations.

Regarding farming operations, despite focus on sugar beets and soybeans production, the company keeps to the best crops rotation practices and demonstrates rather stable yields per 1 ha, which are not the best as for Ukraine, but are sustainable and reflect average-cost strategy. With total land bank of 245k ha, the company is 6th largest farmer in Ukraine (in addition, Astarta owns 660k tons of storage facilities). Close to 60-65% of farming division realization is Intragroup.

As could be noted before, one of main features and positive factors in activity of Astarta is synergy of its operations and vertical integration (fully shown here), though as still close to 50% of total consolidated revenues has been provided by sugar segment, Astarta remains exposed to situation on Ukrainian sugar market. The company has no assets in zone of conflict in the East of Ukraine.Production facilities are mainly situated in Poltava, Kharkiv, Vynnytsa and Khmelnitskiy regions, land bank – in Kmelnitskiy, Vinnitsa, Kharkiv, Poltava, Ternopil and Zhitomir regions.

Since August’06 Astarta has been listed on WSE under the ticker symbol AST. Current free float is – 36%.

Operating Figures

2016 2015 2014 2013 2012
Sugar production, k tons 505.0 355.0 466.0 305.0 430.0
Sugar yield, % 15,5% 15,1%
Soybeans crushing, k tons 195.0 200.0 0 0
Raw milk production, k tons 106.0 103.0 104.0 91.0 84.0
Milk yield per cow, k tons 6.6 6.4 5.8 5.5

Sown area distribution and yields for main crops are represented in table below:

Season 2016/2017 2015/2016 2014/2015 2013/2014 2012/2013 2011/2012
Corn
Sown area, ha 45 09346 55051 45051 56241 65036 750
Yield per 1 ha, tons 8.87.66.47.16.59.5
Soybeans
Sown area, ha 41 38871 05063 70056 25049 00039 200
Yield per 1 ha, tons 2.22.12.12.22.12.3
Wheat
Sown area, ha 53 93250 00041 65049 21948 84344 100
Yield per 1 ha, tons 5.85.44.94.74.04.5
Sunflower seeds
Sown area, ha 27 04223 0007 3504 6877 35014 700
Yield per 1 ha, tons 2.62.82.23.32.22.1
Sugar beets
Sown area, ha 44 84234 00049 00037 50051 45049 000
Yield per 1 ha, tons 57.455.049.056.053.050.0
Total land bank, ha 245 000245 000245 000245 000245 000245 000

Land bank of Astarta during last years has been stable, but management has plans to expand it up to 400k ha till Y2019.

Financial information

EUR k 9m 2016 9m 2015 .. 2015 2014 2013
Sales 216 478 200 118 313 997 351 902 327 042
Gross Profit 118 936 113 640 142 820 130 914 81 481
EBITDA 129 006 108 118 130 694 116 857 61 182
EBITDA margin, % 59.6% 54.0% 41.6% 33.2% 18.7%
Net Profit 78 617 27 028 15 941 -68 076 22 300
30.09.16 .. 31.12.15 31.12.14 31.12.13
Total Assets 529 237 - 491 639 506 540 692 993
Fixed Assets 228 556 - 251 594 267 606 366 158
Current Assets 300 681 - 240 045 238 934 326 835
Inventory 224 874 - 171 321 184 090 274 824
Cash 27 741 - 31 209 34 858 6 721
Equity 294 232 - 240 493 220 246 370 509
Debt 183 382 - 203 936 251 366 271 032
9m 2016 9m 2015 .. 2015 2014 2013
Net Operating CF 40 361 30 636 61 744 75 354 20 951
Financing CF -20 104 -41 131 -54 990 -19 915 18 444
Dividends paid 0 0 0 0 0
Net Borrowings -18 597 -38 998 -50 315 -15 501 22 307
Investing CF -21 805 -14 470 -8 658 -25 409 -55 781

Latest financial report of the company

Comments to latest financials:

  • Despite negative influence of several factors (notably UAH devaluation and decreasing purchasing power of Ukrainian population), Astarta Holding keeps demonstrating solid operating and financial performance.
  • In 9m 2016 Astarta demonstrated good performance in all of its business segments - with good sales and EBITDA dynamics. It allowed the company to further decrease its debt burden and improve balance sheet quality (which has already been quite acceptable in the end of previous year).
  • In last reporting period total sales volume of Astarta made EUR 216.5M, by 8% higher y-o-y. Sales growth was mainly related to realization in soybeans processing and farming segments, while in sugar and dairy revenues there have been slight decline in realization. Revenues breakdowns by main segments are represented in table below:
    Sales 9m 2016 9m 2015 Change, %
    Sugar 100 177 103 818 -3.5%
    Soybeans processing 53 073 39 114 35.7%
    Farming 42 784 35 616 20.1%
    Dairy 16 906 17 717 -4.6%
    TOTAL 216 478 200 118 8.2%
  • During last reporting periods sugar accounted for about 45% of total realization volume. In 9m 2016 revenues of the holding from sugar sales made EUR 100.2M (vs. 103.8M in 9m 2015). Decline of realization in natural terms made 11%, partially compensated by growth of average price, which in Y2016 on average made EUR 423/t. With this price, taking into account estimated net cost per 1 ton of sugar for Astarta is in EUR 200-250/ton range, estimated EBITDA margin for sugar business of the company (taking into account margin on sugar beets growing side) is about 35-40%. Profitability of export operations is higher as export price during last months is estimated at about EUR 470-500/ton.
  • The share of sugar export in last reporting period made 19% (45k tons out of total 237k tons), we expect that with more active export of Ukrainian sugar in general the share will grow in Q4.
  • In new season Astarta is to produce more than 450k tons of sugar (vs. 355k tons in last year), which should provide for EBITDA of at least EUR 80M (under current assumptions).
  • In 9m 2016 total Astarta soybeans crushing volume made close to 154k tons of soybeans, flat y-o-y, along with it sales in segment grew by 36% (up to EUR 53M), largely as year ago the company worked on tolling basis with MHP (so soybean meal realization increased by 62% to 107k tons).
  • Raw milk sales volume in last reporting period in money terms made EUR 17M, by 5% lower than in previous year (on positive side is increase of cow productivity by 7% vs. previous year).
  • Farming segment remains main driver of profits for the company. In 9m2016 sales in segment made EUR 43M (by 20% higher y-o-y), significant portion of EBITDA comes from this segment as well (in H1 2016 its EBITDA made EUR 74M out of total EUR 109.2M, for 9m 2016 Astarta did not disclose EBITDA by segments).
  • Taking into account already disclosed by the company results of harvesting campaign and current market prices, we can expect good segment results in new season. Reported yield for soybeans is 2.2t/ha, sunflower seeds – 2.6t/ha, wheat – 5.6t/ha, preliminary yield for corn – more than 8.3t/ha. Basing on current prices and estimated net cost per 1 ha, we expect that EBITDA per 1 ha of Astarta farming operations (disregarding sugar beets) in current season will be in EUR 350-400 range, which means total EBITDA of at least EUR 65-70M. Part of this EBITDA is already reflected in financials as income from biological assets revaluation (total gain from biological assets revaluation in 9m 2016 made EUR 46.6M vs. EUR 55.4M a year ago, for instance, book value per 1 ha of corn as of 30.09.16 was at EUR 690).
  • Summing up our previous estimations we forecast total EBITDA of Astarta in new season to make at least EUR 170-180M. In previous season (October’15-September’16) EBITDA of the company made about EUR 150M, so formally increase is not large, but it should be specially noted that because of influence of devaluation (like for main part of Ukrainian agrarians) formal profitability of holding has been overstated during FY2014-15 (as costs were incurred under lower USD/UAH rate vs. rate when production was realized).
  • EBITDA breakdowns by business segment during last years look as follows (9m 2016 data is not available):
    Year 1H2016 1H2015 .. 2015 2014 2013
    Sugar segment 27 186 21 095 57 022 41 116 14 467
    Margin,% 45.1% 35.4% 37.6% 24.1% 7.3%
    Soybeans processing 8 449 6 845 10 324 19 481 0
    Margin,% 22.2% 22.1% 20.4% 26.3% n.a.
    Farming 73 953 64 199 70 699 63 393 47 085
    Margin,% n.a. n.a. 38.5% 32.8% 25.0%
    Dairy 5 412 825 2 185 8 034 18 610
    Margin,% 45.1% 6.9% 9.1% 27.3% 55.4%
    TOTAL EBITDA 109 188 88 613 130 694 116 857 61 182
    Margin,% 73.9% 70.2% 41.6% 33.2% 18.7%
  • As of 30.09.16 general assets structure had not changed much vs. previous periods of time, main changes related to seasonal factors – biological assets increased from EUR 18M up to EUR 71.4M, we also note good cash position of the company as for season peak (EUR 27.7M).
  • As a result of good profits and mentioned changes in assets net operating cash flow of the company in reporting period made EUR 40M and was directed to debt repayment (EUR 19M) and investments (EUR 22M).
  • As a result of mentioned repayment net debt of Astarta further decreased (to EUR 155.6M vs. EUR 172.7M as of 31.12.15). Current financing structure is seen as rather good with Debt/Equity is close to 0.6x and Net Debt/EBITDA at close to 1.0x.
  • After worsening of balance sheet structure during FYs2014-15 mainly related to UAH devaluation, Astarta concentrated its efforts on deleverage and balance sheet repairing. As a result current financing structure of the company is acceptable, while operations are very efficient. Astarta remains clear leader of target industries and demonstrates good performance in each segment of its operations. Main risks are country risk and FX risk (in a view of still high share of domestic sales in total revenues of the company).

    We estimate current financial standing of the company as good.

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