Kernel publishes operating results for Q3 2016

20 April 2016

Following acquisition of best ex-Creative asset and increased grains operations, Kernel reports quite good operational results for second consecutive quarter, showing good performance of both oilseeds crushing and grains export business.

Despite total crushing volumes in Q3 2016 (FY2016 started in July15 and finishes in June16) remained on the level of Q3 2015, because of high volumes of crush in previous quarter, volume of bulk sunflower oil sold (319.9k tons) was by 28% higher than in Q3 2015 and by 8% higher than in Q2 2016. From one side such performance should support sales of the company in money terms, from another, basing on this information, we can expect some decrease volume of finished production on balance sheet of the company (USD 125M as of 31/12/15). For the whole 9m FY2016 bulk sunflower oil sales volume made 775.1k tons (+6% to 9m FY2015).

As was already noted in February, Kernel purchased part of Creative (till recently 2nd largest Ukrainian oilseeds crushing company) bank debt covered by main crushing asset of this company (total amount USD 95.8M, payable in arrears over five years). Factually the company purchased mentioned asset with annual crushing capacity of 560k tons of oilseeds. In addition, just few days ago Kernel announced that it has divested two oilseed crushing plants located in southern Russia for RUB 800M (approximately USD 12M) paid in cash. Plants have a total crushing capacity of 200k tons of sunflower seed per year. So, net increase of capacity since the beginning of FY2016 made 360k tons.

Volume of Kernel grains sales in Q3 2016 made 1415k tons, by 6% higher vs. corresponding period of previous financial year and by 7% vs. Q2 2016. Grains export dynamics in previous two quarters was significantly worse vs. previous year (in 1H2016 grains sales in natural terms declined by 14% vs. 1H2016), so that Q3 data improved overall picture for FY2016 (for the whole 9m FY2016 decrease in grains sales made 7% (to 3 665k tons)). Taking into account that in current season Ukrainian are rather unwilling to realize its grains early (to hedge FX risks with their stocks), one can also expect rather good results in export of grains in last quarter of FY2016.

Financial report for 9m FY2016 is to be issued by the company on 30 May 2016.

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