14 April 2016
Focusing on export operations and maintaining its leading positions in target segment of domestic market, Ovostar published good financial results for Y2015.
Total sales volume made USD 75.6M, approximately on the level of previous year, while EBITDA margin increased to 43% vs. 36% a year ago (EBITDA in absolute terms made USD 34.8M). Main reason – eggs and egg products average realization price in Y2015 increased (in UAH terms) more vs. raw materials costs. Total eggs production in last year made 1 196M, +15% vs. Y2014. Continuing its expansion program, Ovostar demonstrated growth in each segment of its operating activity. In addition the company keeps to conservative debt policy, having sound financial position (Debt/Equity at 0.2x, the same as Net Debt/EBITDA), which provides good margin of safety in activity.
One should take a note that as was expected basing on operating results of Ovostar in Q4 2015 and Ukrainian domestic shell eggs prices dynamics during last months (in Q4 2015 average realization price made UAH 1.77 per egg, while in Q3 it was 1.34), the company decreased realization of shell eggs in Ukraine in Q4 in natural terms (by 33% vs. Q4 2014, to 149M eggs, partially compensating it with higher export), but increased profitability – EBITDA margin in Q4 made 46%. One should mention that growth of domestic realization prices in Q4 of any given year is seasonal and was related to eggs production market structure in Ukraine (42% of total production in Y2015 was realized by households, generally households production is highly subject to seasonality). In Q1 2016 situation largely changed, as Ukrainian retail shell eggs prices significantly dropped.
As was already noted, during last period of time, because of local market stagnation (mainly due to fall in purchasing power of Ukrainian population), Ovostar has been concentrating its efforts on development of export operations. In Q4 2015 shell eggs export made more than 25% of total shell eggs sales, for the whole Y2015 the share made 26.5% (229M eggs). In addition the company actively develops dry egg products export. Main export destination for Ovostar in Y2015 were Middle East countries (almost 90% of total export volumes), in June’15 the company started export to EU (in total made 7% of export in Y2015, the share is to grow in Y2016).