Having strong focus on development of export operations, the company demonstrated sound results for Q3 and the whole 9m 2015 period.
Realization in money terms remained almost unchanged in 9m2015, with total eggs production being 20% higher than in corresponding period of previous year (in Q3 2015 production grew by 13% vs. Q3 2014). On negative side is decrease of average price in USD terms, which resulted from significant UAH devaluation during last 1.5 years. Average realization price in UAH terms grew from UAH 0.76 per egg up to UAH 1.25, which did not compensate for UAH devaluation (average USD/UAH rate in 9m 2015 made 21.5x, while in 9m 2014 – 11.1x, so that decrease of average realization price in USD terms still made 15%). Along with it UAH devaluation positively influenced cost of eggs production, making export operations more profitable. Profitability has also been supported by lower in USD terms cost of grains, main eggs production cost component. EBITDA margin reached 46% in 9m2015 (vs. 39% in Y2014), EBITDA – USD 24.3M, Net Profit – USD 22.3M.
With domestic realization down 15%, export sales grew by 74% in 9m 2015 (up to USD 15.4M), reaching 29% of total volume (in Q3 2015 alone proceeds from export more than doubled, so quarterly export dynamics is also positive). Main export destination for Ovostar in 9m 2015 were Middle East countries (USD 14.1M of realization in this region vs. just USD 6.9M in corresponding period of previous year. Export into EU countries made USD 549k with the first shipment ever in June’15 (no sales into this region before).
As for balance sheet structure and quality, it remains good, as Equity financed close to 80% of total assets as of 30/09/15, the company remains quite conservative in its debt usage. As of reporting date bank debt made only USD 16.7M, represented by credit lines from Landesbank Berlin AG / AKA. Main part of the debt is long-term with maturities up to Y2021, so that liquidity position of the company remains perfect: Current Ratio (ratio of Current Assets to Current Liabilities) as of 30/09/15 was at 4.5x, while Cash increased up to USD 9.4M vs. 2.5M as of 31/12/14. Relative risk factor here is the fact that USD 4.1M of cash position is in UAH, which is under risk of further devaluation, but we do not see this risk to be significant for Ovostar, as further devaluation will have more positive sides for the company than negative.