17 April 2016
The company demonstrated slightly better than we expected financial results in Q4, while general results for Y2015 were rather solid (taking into account current business environment). What is more important, the company continued its deleveraging program, so that decrease in total volume of debt during last two years was close to 30% of total exposure as of 31.12.13. As a result financial position of the company strengthened.
In Q4 Industrial Milk Company mainly realized corn from current season harvest (corn made 55% of total planted area in Y2015), its revenues made USD 40.1M, EBITDA – USD 9.6M with EBITDA margin of 24%. It is good result, as generally the company distributes main part of profit to 1H of any given year with revaluation of biological asset (and showing profits from revaluation):
|Sales||66 488||73 900||55 908||82 359||61 485||53 282|
|EBITDA||8 649||57 873||-813||58 211||-2 074||51 551|
Amount of profits shown in 1H depends on aggressiveness of assumptions applied by management to revaluate biological assets. As of 30.06.15 value of corn (as biological asset) was USD 956 per 1 ha, as of 30.09.15 the company decreased this value to USD 903 having shown negative EBITDA for Q3 (USD -924k, though loss from biological asset revaluation was partially offset in P&L statement of the company by income from sunflower seeds realization (sunflower seeds demonstrated record-high yields in Y2015 and we estimate it to be the most profitable crops for IMC in this season)). In this respect, mainly because of higher than expected corn realization price in Q4 (actual average price was disclosed at USD 155 per 1 ton vs. USD 145 expected price, so that revenues per 1 ha for corn (taking into account net yield per 1 ha at 7 tons) was at USD 1 064), the company has shown better than expected profitability in Q4.
For the whole Y2015 revenues have been approximately on the level of previous year (USD 140M), the company increased sales of its all crops in natural terms by 20-40%, which was offset with lower average prices (for corn price decreased from USD 177 per 1 ton to USD 155). Growth of realization in natural terms was firstly caused by rather large volumes of previous season’s corn harvest sale in 1H (+25%, higher stocks as of beginning of the year) and higher sales of new season crops in 2H. Along with it, one should note lower than in previous year final stocks of crops (by 15-20% lower than as of 31.12.14, more than 90% - corn), which would mean lower expected sales for 1H 2016.
As for BS structure, as was already mentioned, main positive factor has been ongoing deleverage – total volumes of loan decreased from USD 140M as of 31.12.13 to USD 98.7M. Despite this debt remains main source of assets financing with Debt/Equity at 1.65x as 31.12.15.