Ovostar - operational stability and high profitability

28 July 2023

One of the largest Ukrainian producers and exporters of chicken eggs has published operating results for the second quarter of 2023.

Q2 2023 Q1 2023 Q2 2022
Eggs output, mln 370362423
Shell eggs sales, mln 237241309
Shell eggs export, mln 103105101
Domestic eggs sales, mln 134136208
Eggs processing, mln 12192124

According to the company's operating report, the total hens flock, after a significant decrease during the first half of last year (from 8.4 million heads at the end of 2021 to 6.26 million heads), stays at a relatively stable level of 7.2-7.3 million heads during the last reporting periods.

The number of laying hens increased from 6 million heads on 12/31/22 to 6.54 million heads on 06/30/23 (6.18 million heads a year ago).

The total production of eggs by Ovostar in the reporting quarter amounted to 370 million pieces, flat vs. the previous two quarters figures, but is significantly lower y-o-y (in the second quarter of 2022, the volume of egg production was 423 million pieces).

The dynamics of Ovostar egg production in recent years is shown in the graph below:

Ovostar eggs output Q2 June 2023

Exports of shell eggs (103 million pieces) also remained stable both q-o-q and y-o-y.

The volume of egg processing in the reporting quarter amounted to 121 million pieces, which also corresponds to last year’s figure, but is 31% higher than in the previous quarter.

Each year, starting from the spring months, the price of eggs in Ukraine decreases significantly, the reason is the increase in production by households, which occupy a large share in the total volume of egg production in the country.

Ovostar eggs export Q2 2023

In 2023 from April to June, prices decreased by 32% compared to the peak level, but in general they remain at significantly higher levels compared to last year (according to the State Statistics Service, in June, retail prices for eggs in Ukraine were higher than last year by 84%).

During the second quarter of 2023, the average selling price of eggs by the company amounted to $0.115 per 1 piece (in the previous quarter - $0.139 per 1 piece, in the second quarter of 2022 - $0.066 per 1 piece).

Although in the second quarter of 2023, the financial results of Ovostar will somewhat worsen compared to the previous quarter (due to lower prices on the domestic market), they will be significantly better than last year.

In general, taking into account that in September-October we can expect a new increase in domestic egg prices in Ukraine, while domestic grain prices will remain relatively low as a result of the suspension of the grain corridor (grains and oilseeds are the basis for feed production, therefore occupy a significant share of the total net cost of egg production), Ovostar's financial results in 2023 may become the best in the entire history of the company.