Page 70 - UKRRptJun19

30. The company’s net loss swelled 2.7x y/y to €20.1mn. Net debt of Milkiland remained nearly flat y/y at €85.6mn, implying a worsening of its Net Debt to EBITDA ratio to 40.5x as of end-2018, from 8.3x a year before. The company is still in negotiations with its creditors on possible debt restructuring. Achieved revenue and EBITDA metrics in 2018 are the worst in the company’s history as a public company. Moreover, its annual 2018 EBITDA was 53% lower than in 9M18, implying the company’s performance worsened closer to the year’s end. With such results, the company’s prospects to remain afloat are as weak as never before.
Increasing investment in food processing, Delta Wilmar has bought Dragon Capital’s stake in Chumak, Ukraine’s leading producer of ketchup, mayonnaise, and tomato paste. “It perfectly fits our group strategy of further downstream integration into food processing with high added value,” said Yuriy Golianych, general director of Delta Wilmar, the Ukraine unit of Singapore’s Wilmar International Ltd, widely considered to be Asia’s largest agribusiness group.
Revenue of Ukraine's egg producer Ovostar Union declined by 8% year- on-year to $31mn in January-March (almost flat quarter-on-quarter). The company’s Ebitda fell by 43% y/y to $5.4mn in the first quarter of 2019 and its Ebitda margin slid to 17% vs. 28% a year ago. Its net profit declined 39% y/y to $4.5mn (or a 37% q/q increase) in January-March. Export sales jumped 25% y/y to $18mn, so the export revenue share reached 58% in the first quarter vs. 43% a year ago. The company’s operating cash flow before working capital changes dropped 60% y/y to $2.8mn in January-March. Andriy Perederey at Kyiv-based brokerage Concorde Capital believes that the company’s Ebitda was driven by weakening operating results and a drop in shell egg prices in the first quarter of 2019. "On the other hand, the company’s export share increase was a positive factor for the company’s currency risk," he added in a note on May 17.
Ukrainian grain producer Industrial Milk Company (IMC) generated $50.8mn in Ebitda in 2018, or 30% higher year-on-year, according to its annual report published on May 1. The company also posted a 3.8% y/y increase in revenue to $131.6mn in 2018. IMC's key revenue drivers were higher sales volumes of sunflower seed and soybeans and higher prices for corn and wheat. Its revenue from corn sales, the key company’s main crop, contributed $81.6mn to total revenue, or a 3% y/y increase. The company’s net income swelled 55% y/y to $27.6mn in 2018. The company's operating cash flow before working capital changes decreased 4% y/y to $37.4mn in 2018, and its net cash flow from operations decreased 13% y/y to $28.2mn. Its CapEx was $5.2mn, or flat y/y in 2018. The company’s total debt decreased 9% y/y to $59mn and its net debt slid 13% y/y to $53mn at the end of 2018. Its net debt-to-Ebitda ratio was 1.04x as of end-2018 vs. 1.55x a year ago. Andriy Perederey at Kyiv-based brokerage Concorde Capital believes that the company has adhered to its strategy of reducing its debt, which is a positive development. At the same time, we are concerned about IMC’s reported net gain from changes in the fair value of biological assets and agricultural produce, which increased 17% y/y to $73.3mn and is higher than company’s five-year average by 33%. "That was a key contributor to IMC’s Ebitda growth, mathematically, but such Ebitda improvement has not been supported by the company’s cash flow statement, where key operating metrics worsened. All this might suggest the company was doing its best to maximize its key P&L metrics, possibly preparing for some corporate event," he added in the note.
70 UKRAINE Country Report June 2019 www.intellinews.com