27 May 2023
In the first quarter of 2023, one of the largest Ukrainian producers of chicken eggs and egg products demonstrated strong financial results.
Ovostar has published its financial report for the first quarter of 2023.
The main operating and financial figures are shown in the table:
Q1 2022
Q4 2022
Q1 2023
Eggs output, mln
371 356 362
Shell eggs sales, mln
232 258 241
Revenues, $M
27.7 43 47.3
EBITDA, $M
-14.7 4.7 9.4
Operating cash flow, $M
6.6 8.7* 23.6
Adjusted operating cash flow, $M
3.3 5.4** 20.2
** - disregarding financial aid to shareholder adjusted operating cash flow made $18.1M
According to the company's report, the total eggs output was almost flat y-o-y and amounted to 362 million pieces. Sales of eggs during the quarter amounted to 241 million pieces (of which export – 105 million pieces), processing – 92 million pieces.
Despite the stable sales volume compared to last year, due to a significant increase in prices, the total revenue of Ovostar in the reporting quarter increased by 71% y-o-y and amounted to $47 million. The share of the company's income from the export of eggs and egg products exceeded 50%, compared to 26% in the first quarter of 2022.
The average selling price of eggs on the domestic market during the reporting period was (without VAT) $1.27 per dozen, the average export price - $1.62 per dozen. It means, even taking into account the additional logistics costs associated with exports (compared to domestic sales), despite the significant increase in egg prices in Ukraine in the second half of 2022, export of shell eggs remains more profitable vs. domestic sales.
It can be expected that in the future the company will try to increase the share of exports in its sales (especially given the seasonal increase in egg production in Ukraine by households in the summer, which usually contributes to lower domestic prices).
The profitability of operations in the first quarter of 2023 increased both y-o-y and q-o-q.
Ovostar's EBITDA in the reporting period amounted to $9.4 million (previous quarter - $4.7 million), even despite the depreciation of biological assets in the amount of $16.9 million (previous quarter - $17.5 million).
Operating cash flow amounted to $23.6 million (in the first quarter of 2022 - $6.6 million, in the fourth quarter of 2022 - $8.7 million). It should be taken into account that in the fourth quarter Ovostar provided a loan to the company owned by the majority shareholders - Boris Belikov and Vitaly Veresenko - Prime One Capital Limited in the amount of $12.7 million. Without this loan, the cash flow in the last quarter would have amounted to $21.4 million (which, however, is lower vs. the first quarter of 2023).
Ovostar's adjusted operating cash flow (which takes into account investments in the renewal of the flock, therefore is, in our opinion, the most important to understand the situation in the business) in the current quarter was $20.2 million, compared to $3.3 million in the same period of the previous year.
A significant operating cash inflow led to the fact that, as of the end of March, the total amount of cash on the company's balance sheet was $29 million (a year ago - $3 million) with a total amount of loans of about $8 million. Financial standing of Ovostar remains quite good.