IMC 2015 operations update&strategy

16 February 2016

Total crops production made 638k tons, which was by 10% less than in previous year, mainly as a result of change in crops mix (decrease of corn share, most likely in a view of WC resources optimization) and slight decrease of corn yield per 1 ha.

On the other hand, unlike some other Ukrainian farmers, yield for soybeans was significantly better vs. previous years (2.5tons per 1 ha with average for last 4 years at 1.6 tons). Sunflower seeds and wheat yields were good (as for Ukraine in general) at 2.8 tons and 5.0 tons per 1 ha correspondingly, which was important in a view of increase of sown areas under these crops.

Basing on report published on the web-site of WSE, IMC maintains the land bank expansion strategy for 2016-2020. According to this strategy the company intends to increase land bank from 136.7k ha in 2016 year to 206.7k ha in 2020. The plans of the company include growth of land bank to 156.7k ha in 2017 and 176.7k ha in 2019. We see such expansion can lead to sustainable growth only in case the company will be able to maintain balanced financing structure, which became risky after aggressive growth in FYs2011-13, so that during last two years the company was mainly focused on operating efficiency and deleverage.

In addition, according to report IMC has sufficient grain storage capacities in line with the above mentioned land bank expansion strategy till 2020. The company doesnt plan to increase grain storage capacities, but plans to reconstruct some of the companys silos with the aim to improve their efficiency and replacement of existing flat storage capacities with modern storage bins.

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