21 October 2023

Astarta shows good results in sugar segment and delays grains sales because of low prices.

Sales volume, tons	Q3 2023	Q2 2023	Q3 2022
Sugar	83 190	68 863	67 788
Wheat	22 410	5 904	52 540
Corn	32 744	58 788	51 903
Soybean Oil	9 463	12 252	18 016
Soybean Meal	29 655	58 910	31 372
Milk	25 702	28 389	23 933

Despite restrictions on the export of sugar from Ukraine since June and till the first half of September, Astarta increased the volume of sugar sales in the reporting period, both q-o-q and y-o-y.

Overall, Astarta's sugar sales in the third quarter of 2023 were the highest for the last two years. It is also important that ahead of the expected increase in sugar production in 2023, Astarta has significantly reduced its sugar stocks and has relatively low carry-over stock for the new season.

In the reporting quarter, the average Astarta selling price of sugar slightly decreased compared to the previous quarter (26.7 UAH per 1 kg compared to 28.2 UAH in the second quarter of 2023).

In the previous quarter, Astarta earned (at the EBITDA level) from the sale of sugar approximately EUR 180 per 1t. Due to the decrease in the average sales price, in the third quarter of the year this earnings may decrease slightly, but due to the increase in the volume of sales, the EBITDA of the segment in the reporting quarter, according to our estimates, will make approximately EUR 12 million (at the level of the previous quarter).

Taking into account the unfavorable situation with the export of Ukrainian grains (namely, a significant decrease in prices in Ukraine due to the decrease in world prices for grain and oilseeds, as well as the absence of exports through Ukrainian deep-sea ports), the volume of sales of grain and oilseeds by Astarta in the reporting period was not very significant.

In the third quarter of 2023, Astarta sold 22.4 thousand tons of wheat (out of a total harvest of 270 thousand tons in 2023), 32.7 thousand tons of corn, and 11.8 thousand tons of rape (from the harvest of 56 thousand tons). Sales prices were low: corn - 4.9 thousand UAH per 1 ton (8.6 thousand UAH a year ago), wheat - 6.4 thousand UAH (8.6 thousand UAH), rapeseed - 13.4 thousand UAH (23.3 thousand UAH).

Undoubtedly, like many other Ukrainian agricultural holdings, Astarta is counting on the possibility of exporting grain through the deep-sea ports of Ukraine and the growth of domestic and export prices, therefore it is postponing the sale of grains.

Meanwhile, the company has finished harvesting late oilseed crops - sunflower and soybeans. Soy yield comprised 3.1 t/ha (total harvest – 169,000 tons), sunflower – 3.0 t/ha (83,000 tons).

Given the decrease in soybean crush volume at the end of the season, Astarta's sales volume of soybean processing products in the reporting quarter also decreased compared to the previous quarter. In the new season, we can expect good volumes of soybean crush. It should be noted that due to a significant increase in soybean acreage in the current season, as well as a good yield, the company will be well supplied with its own raw materials for processing in the current season.

The profitability of processing, which was at a record level in the 2022/23 season, is expected to decline (but will be higher than in the years before the full-scale invasion).

In any case, it should be noted once again that in the new season, Astarta is betting on the processing of sugar beet and soybeans (so it correspondingly increased the acreage under these crops at account of corn).

Finally we note that in the reporting quarter milk sales of Astarta increased by 7% compared to the third quarter of 2022, but decreased by 10% compared to the previous quarter. The average selling price of milk almost did not change compared to the previous quarter.