25 July 2016
Having shown growth of main operating figures in both Q2 and 1H 2016, with clear focus on export operations, the company demonstrates quite sustainable development. On negative side has been noticeable drop of average eggs realization price (to influence short-term profitability).
In line with previous plans total flock of lying hens further increased – up to 5.9M from 5.6M as of 31.03.16. General eggs production in Q2 made 353M, which was by 16% more than in Q2 2015 (for 1H2016 corresponding figure were 670M with 15.5% growth rate).
Sales of shell eggs in Q2 made 273M eggs (vs. 201M previous quarter and 220M in Q2 2015). Export sales made 28% of total realization (76M, record-high for Ovostar quarterly volume, +40.7% vs. Q2 2015). Along with export growth, domestic sales increased as well (by 18.7% vs. Q2 2015, up to 197M). Partially it was achieved at account of realization price decline – as was previously expected by us (basing on Ukrainian retail eggs prices dynamics), in Q2 Ukrainian eggs realization price continued its slide.
Average price per 1 egg in Q2 2016 made UAH 1.09 vs. UAH 1.21 in corresponding quarter of previous year and UAH 1.52 in Q1 2016 (peak price was reached in Q4 2015 at UAH 1.77 per piece). This fact will definitely negatively influence profitability of Ovostar in both Q2 and 1H 2016, on the other side, the company has quite good margin of safety from margin perspective (EBITDA margin in Q1 2016 made 39%, also some decrease of inputs prices and UAH revaluation during reporting period can somehow mitigate negative influence of average realization prices decline), so can well afford such temporary. Retail eggs prices in Ukraine somewhat grew in the end of Q2 (by up to 10%), so that more positive figures can be expected for Q3.
In Q2 the volume of eggs processed grew by 28% vs. Q2 2015 and made 105M (for 1H 2016 – 199M). This fact along with growth of both liquid and dry eggs products export to EU was specially noted by CEO of the company – Mr. Borys Bielikov – in his comment to presented operating figures.
Ovostar financial report for 1H 2016 is to be issued on 29 August 2016.