Page 66 - UKRRptNov20

July-August from last year’s record harvest. At the same time, its sales of sunflower oil decreased 1.7% y/y to 296.2 kt.
The company reported a 56% y/y swelling in throughput of its seaport terminals to 1.87mmt in the quarter, driven by an increase of its transshipment capacity. Its grain export was 2.13mmt in 1QFY21, which is a 31% gain y/y.
The company’s farming results in the current season were less exciting, as the yields of its three key crops – corn, sunflower and wheat – were 12% (expected), 13% and 17% less y/y, which the company attributes to less favourable weather conditions compared to the previous season. Due to a weaker crop harvest by Kernel and other farmers in Ukraine, the company’s volumes of silo intake plunged 36% y/y to 1.25mmt in 1QFY21.
“The company’s spectacular results in oilseed crushing and infrastructure were driven by large carryforwards of the previous sunflower harvest and increased port capacities. Meanwhile, as this season’s sunflower and grain harvests will be weaker in Ukraine, we expect a decrease in physical volumes in crushing, its silo and trading segments in the coming quarters, as well as pressure on the company’s margins in these segments,” Alexander Paraschi of Concorde Capital said in a note. “Another possible risk for Kernel this season could be failure of some farmers to deliver grains to the company under forward contracts. Many farmers are choosing to default on the contracts that they concluded in spring at the forward prices, which are way below the current spot prices, according to the Ukrainian Grain Association.”
Standard & Poor's Global Ratings yesterday raised the long-term credit rating of​ ​Kernel​ to ‘B+’ -- one notch higher than Ukraine’s sovereign rating. The rating upgrade from ‘B’ came with a stable outlook. In the universe of Ukraine’s 25 most traded corporate bonds, no other bond wins a ‘B+’ rating from S&P. “We positively assess the issuance of new senior unsecured bonds to refinance bonds maturing in January 2022,” S&P said, referring to this week’s marketing of new Eurobonds for Kernel. “The stable outlook reflects our view that the low risk of disruption to export volumes due to the COVID-19 pandemic and significantly lower capital expenditures in fiscal 2022 should support cash flows.”
● MHP
MHP​ poultry sales jump 18% y/y in 3Q20.​ ​Ukraine's largest poultry producer MHP sold 195.1 kt of poultry meat in 3Q20, which was 17.6% y/y growth (and a 14.2% qoq increase), according to its October 21 trading update. The company’s poultry exports jumped 37.0% y/y to 180.5 kt (up 22.6% qoq), while domestic sales were almost flat y/y (or 5.1% qoq growth) in 3Q20. MHP’s poultry meat sales at its EU-based facilities were 16.8 kt, or 5.6% more y/y (and up 6.0% qoq) in 3Q20.​ ​During the quarter, the average poultry selling price dropped 11.0% y/y to $1.36/kg (and 7.1% increase qoq). That implies MHP’s revenue from poultry sales rose 3.3% y/y to $265mn in 3Q20. MHP’s EU-based facilities average selling price was €2.48/kg, or 6.4% lower y/y (and 0.8% lower qoq) in 3Q20.​ ​In 9M20, MHP’s poultry sales increased 2.4% y/y to 523.8 kt, while the average selling price declined 9.5% y/y to $1.34/kg. The company’s export sales volumes rose 2.5% y/y to 279 kt and domestic poultry sales increased 1.3% y/y to 244.7 kt in 9M20. MHP's expectations for 2020 spring crop yields are about 5.9 t/ha for corn (37% lower y/y) and about 2.9 t/ha for sunflower (19% lower y/y). Also, the company’s wheat yield declined
66​ UKRAINE Country Report​ November 2020 ​ ​www.intellinews.com