26 April 2017

Operating results of the largest Ukrainian sunflower oil producer and one of the largest grains traders have been generally good.

Key figures*

	Q3 FY2017	Q3 FY2016	Change, %	9m FY2017	9m FY2016	Change, %
Oilseeds crush, k tons	861	704	22%	2 049	2 037	1%
Sunflower Oil sales, k tons	328	348	-6%	894	852	5%
Grains sales, k tons	1 390	1 415	-2%	4 103	3 665	12%

*-financial year of the company starts in July and finishes in June of the following year

In reporting period total volume of sunflower seeds crush has been at 861k tons, which is by more than 20% higher than in corresponding periods of two previous seasons and is not far from record-high level of Q2 FYs2016-17. Earlier we noted relatively high sunflower seeds stock of the company as of Q2 FY2017 end, so that rather good volumes of crush in Q3 were generally anticipated.

In 9m FY2017 total Kernel crushing volume made 2M tons of seeds (on the level of previous financial year). Quarterly dynamics during last years looks as follows:

Total sunflower oil sales in reporting quarter made 328k tons vs. 348k tons a year ago and 372k tons in previous quarter. Sunflower sales in bulk declined y-o-y by 8% and made 294k tons. Apart from sales volume crushing margin of the company remains main question in assessment of segment’s performance (in Q2 FY2017 segment’s EBITDA margin rebounded from the lowest level for the several latest seasons reached in Q1 (7.2%) and made 9.4%). Taking into account current competition for raw materials among crushing we do not expect further growth of margin in short-term period.

Volume of Kernel grains sales in Q3 FY2017 made 1 390k tons, lower vs. both close to record-high volume for previous quarter (1 525k tons) and Q3 FY2016 (1 415ktons). Along with it, in last reporting quarter total volumes of grains transshipment through the port terminals operated by Kernel increased – up to 1 614k tons in Q3 vs. 1 471k tons a year ago.

For the whole 9m FY2017 total volume of grain sales of the group made 4.1M tons, by 12% higher y-o-y, driven by record-high crops in Ukraine (including record-high harvest of Kernel itself) and, to the lower extent, Russia. Total volume of grains transshipment through port terminals made 4.67M tons (+7.7% y-o-y), including 3.3M tons transshipped through Ukrainian terminal in Chernomorsk (vs. 2.9M tons in 9m FY2016).

In its report Kernel noted good condition of winter crops as of reporting date. In new season the share of winter wheat in total sown area will remain at the level close to previous season (21%). Expected share of corn is 37%, sunflower seeds – 22%, soybeans – 12%. Total sown area of the company is to make 382k ha (slightly below last season’s 385k ha).

Financial report of Kernel for Q3 FY2017 is to be released in the end of May.

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