Page 75 - UKRRptNov21

Its EBITDA in the infrastructure & trading segment (excluding Avere) decreased 37% y/y to $111mn, again, due to lower margins that resulted from high competition for decreased harvest volumes in Ukraine. Kernel’s farming EBITDA increased 244% y/y to $461mn, due to better prices last year, as well as due to high prices and the current season’s high harvest of early crops (which led to IAS 41 gain of $133mn).
Kernel’s net profit increased 335% y/y to $513mn, and the company expects to distribute 7% of it in dividends ($35.6mn, up 0.9% y/y, implying DPS of $0.44). The company has already spent $50mn on its share buyback program in September (purchasing 3.84% of shares), out of a total announced program of $250mn for two years.
Its operating cash flow before working capital changes increased 86% y/y to $786mn and net cash generated from operations increased 71% y/y to $460mn. Its cash used for investment activities was broadly flat y/y at $205mn in FY2021. In the next year, Kernel expects to spend $265mn for CapEx.
The company’s end-June net debt amounted to $836mn (including $324mn in capitalized lease liabilities), down 15% y/y. Its net debt to EBITDA ratio improved to 0.90x as of end-June, from 2.21x a year ago.
In FY2022, the company plans to increase oilseed crushing volumes 16% y/y to 3.7 mmt due to an increase of its crushing capacity (with the commissioning of a brand new plant in western Ukraine) and an expected 24% higher sunflower seed harvest in Ukraine this season. In the oil segment, the company expects better margins due to a decrease in competition for seeds and a lack of one-off writedowns. A record grain harvest in Ukraine will allow the company to increase grain export volumes (it expects volumes to increase to 11 mmt, or 37% more y/y in FY2022) and preserve strong results in the segment. At the same time, Kernel expects no more exceptional results of Avere. In the farming segment, the company expects to benefit from its bumper harvest and still strong soft commodity prices.
● MHP
MHP, Ukraine’s largest poultry producer, is selling less meat, but making more money. In the third quarter of this year, sales of chicken meat were down 5% yoy, to 184,400 tons. But prices were up 32% yoy, to $1.79/kilo. Concorde Capital’s Andriy Perederey writes: “MHP’s poultry sales slid due to lower domestic sales in 3Q21, which looks like a market response to the significant increase of prices...We estimate MHP’s EBITDA in the poultry segment will be in the range of $260-270 million in 2021 (vs. $194 million in 2020).”
● Other
Shell egg production at Ovostar Union (OVO PW) rose 1.5% y/y to 1,254mn units in 9M21, the company reported in its October 25 trading update. Its total hen flock slid 1.2% y/y to 8.0mn heads and the laying hen flock decreased 4.3% y/y to 6.6mn as of end-September. The company’s shell
75 UKRAINE Country Report November 2021 www.intellinews.com