Kernel releases FY2015 financial report and Q1 2016 operating results

The company reported strong operating and financial results for FY2015 (ended at 30.06.15) demonstrating stable vs. previous year realization in money terms and growth of EBITDA from USD 223M up to USD 397M (which can be partially related to UAH devaluation, so can not be regarded as fully sustainable).

Clearly on positive side is 1) increase of sunflower seeds processing volumes (segment benefited from the fact that part of market players had not enough WC resources against a background of general liquidity squeeze in Ukraine and from strong carryover of sunflower seeds stock from previous year), so sunflower oil sold in bulk increased from 920k tons up to 1030k tons in FY2015; 2) growth of grain sales volume (which in FY2015 reached 4.7M tons) and 3) improvement in operating and financial performance of farming direction (after weak results a year ago in current one crop yields improved by 16-28%). All these developments offset decline in realization prices for both grains and oilseeds, so that total realization volume in USD terms has been stable vs. previous year, while EBITDA significantly grew.

Because of dry weather during harvested campaign silo services division underperformed in FY2015 (partially margin has been just redistributed from silo services division to farming, which incurred lower drying costs), while export terminals direction demonstrated good results with EBITDA margin remained at more than 60%.

Sales and EBITDA breakdowns by directions are represented in table below:

FY2015 FY2014 FY2013 FY2012
Sales (incl. Intragroup)
Sunflower Oil** 1 214 1 212 1 711 1 395
Grain 1 053 1 054 972 599
Farming* 310 290 193 171
Port terminals* 55 45 49 29
Silo services* 42 75 46 51
Total consolidated 2 329 2 393 2 797 2 078
EBITDA
Sunflower Oil** 213 178 199 199
Grain 59 59 13 27
Farming 98 -44 68 74
Port terminals 37 27 27 18
Silo services 18 39 19 18
Total consolidated 397 223 287 319

*-main part of segment revenues - Intragroup

**-includes bulk and bottled

You can find all relevant information on financial and operating performance of Kernel Group in FY2015 here.

Along with financial results the company published its operating report for Q12016. It showed decline in realization volume by close to 20% for all main business directions (largely because of high base and low carryover stocks). It was also reported that dry weather in August negatively influenced yields of late crops in some regions, so that average yields for corn and soybeans are to be somewhat lower than expected (yield at 7.3 tons per ha is expected for corn, 1.8 tons per ha for soybeans, but strong 2.7 tons for sunflower (as it is less vulnerable to draught)). Yields for early crops have been in line with the plans.

As for recent developments it was stated that the company signed a tolling agreement to crush 200,000 tons of sunflower seed at a third-party plant located in Ukraine (presumably crusher owned by Creativ Group), also during conference call on 22 August Kernel CEO Mr. Andrey Verevskiy stated that the company has plans to construct a second grain transshipment terminal in the port city of Illichivsk on the Black Sea. Verevskiy said that the company is also considering new acquisitions, worth USD 100-150 mln, though he doesnt expect any M&A deal to be closed in FY2016.

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Kernel
Ferrexpo
Astarta
Ovostar

Type Price Weekly change,% Annual change,%
Corn CBOT
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Iron Ore
Crude Oil

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