Ovostar - Q2 2017 operating report

24 July 2017

The company improved its performance in all segments of its activity, despite challenging situation on Ukrainian domestic eggs market.
Q2 2017 Q2 2016 Change, % H1 2017 H1 2016 Change, %
Shell eggs production, mln 411 353 16.4% 815 670 21.6%
Shell eggs sales, mln 242 273 -11.4% 518 474 9.3%
Eggs exported, mln 104 76 36.8% 186 145 28.3%
Eggs processed, mln 138 105 31.4% 237 199 19.1%

Total flock of Ovostar further increased up to 7.9M (thereof 6.7M laying hens flock) from 7.6M as of beginning of Y2017. Eggs production in Q2 2017 made 411M, approximately on the level of two previous quarters and by 16% more than in Q2 2016. In total in H1 2017 Ovostar Union produced 815M eggs (+21.6% y-o-y).

Shell eggs sales in Q2 2017 made 242M, by 11% lower y-o-y and by 12.5% lower vs. previous quarter (offset by growth of eggs processing). We note that in line with strategy of the company shell eggs sales keep growing in Q2 2017 they made 104M eggs (the largest quarterly volume in the history of the company), by 37% higher y-o-y.

On the other side in the last reporting quarter volume of shell eggs domestic sales declined y-o-y by 30%. On our opinion main reason of this fact is following: during February-May 2017 Ukrainian retail eggs prices declined by 45%, on the other side Ovostar production belongs to middle+ segment of the market, so its price is still higher vs. market average. According to our estimations, Ovostar aims to increase its export volumes for both shell eggs and egg products, while on domestic market it tries to focus on its market segment and to maintain its profitability.

Breakdowns of Ovostar shell eggs sales by market (domestic/export) is represented on the chart below:

Ovostar Union shell eggs sales volumes q2 2017

Average realization price in last quarter made UAH 1.2/egg, vs. 1.4/egg in previous quarter, but by 9% higher y-o-y.

Average quarterly realization prices of Ovostar (and its profitability in corresponding quarters) during last period of time looked as follows:

Average eggs realization price of Ovostar q2 2017

Eggs processing volumes in last reporting quarter made 138M pieces (vs. 99M in previous quarter and 105M in Q2 2016).

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