Page 76 - UKRRptFeb19

production jumped 32.8% y/y in 2018. The main driver was its corn harvest of 1,344 kt, or 50.5% higher y/y. Its corn yield jumped 49.3% y/y to 10.9 t/ha. At the same time, yields of sunflower and wheat increased 6.7% y/y (to 3.2 t/ha) and 1.7% y/y (to 6.1 t/ha), respectively. The company also announced its 2018/19 sowing campaign results of winter crops, with total sowing area of 94,000 ha, or 8.5% higher than in the previous season. The company’s sowed area under winter wheat decreased by 3.1% y/y to 47,000 ha, while its area under rapeseed increased by 27.2% y/y to 38,540 ha. “MHP enjoyed no seasonal increase in its poultry prices in the fourth quarter of 2018, which is a disappointment. We estimate its poultry segment revenue will be about $870mn in 2018, or 22% y/y higher. Also, we see that the company’s poultry segment EBITDA will be closer to the lower range of our expectations, or $320mn. On the other hand, we see that the company will be able to reach the upper range of our expectations on aggregate 2018 EBITDA ($480mn) owing to the farming segment’s improved performance. We remain bullish on MHP stock and neutral on its Eurobonds,” Andriy Perederey of Concorde Capital said in a note.
Ukraine's agricultural giant Astarta reduced its sugar output by 24% year-on-year to 352 tonnes in 2018 , which is the company’s weakest sugar production result in the last five years. The company also said it cut its use of energy per unit of sugar output by 5% y/y, the company reported on January 17. Meanwhile, the nation's sugar association reported on January 12 that Ukraine's manufacturers produced 1.69mn tonnes of sugar since the start of the 2018/2019 production season (which lasts from September to early February) as of January 11, which is 16% less y/y. Astarta’s harvest of grains and oilseeds reached 1,065 tonnes in 2018, which is 35% more y/y and an all-time high for the company. The company also highlighted that its yield of corn was 9.8 t/ha, which is 53% better y/y. Corn accounted for 58% of Astarta’s total grain and oilseed crop in 2018. The company's output of soybean products (meal, oil and husk) was 209 tonnes in 2018, which is 2% more y/y and repeats its all-time high level of 2016. Its production of raw milk was 102 tonnes, or 7% less compared to the record-high level of 2017. Alexander Paraschiy at Kyiv-based brokerage Concorde Capital believes that the bumper grain harvest will be supportive for Astarta’s P&L in late 2018 and early 2019. "But it won’t be able to offset the effect on P&L from the weak performance of the company’s sugar segment, which is being affected by weaker sugar prices in Ukraine," he wrote in a research note on January 18. Ukraine’s declines in total sugar production in the current season will be supportive for sugar prices in 2019, so we see a good chance for some price recovery by mid-year, Paraschiy added. "All this may result in Astarta’s P&L remaining at current levels at minimum in 2019, compared to 2018. We remain positive about Astarta’s mid-term value growth prospects."
Sunflower seed crushing volumes at Ukraine’s largest sunflower oil producer and grain trader Kernel fell 6.5% y/y to 1.36mmt in 1H FY19 (July-December 2018), according to its operational update published on January 21. Kernel’s total oil sales increased 8.2% y/y to 776 kt, while bottled sunflower oil sales were almost flat y/y at 30.0 kt in 1H FY19. The company’s grain sales nearly tripled y/y to 5.86mmt due to strong trading volumes from Ukraine (66% y/y increase to 3.13mmt) and physical trading volumes through Swiss-based company Avere. In 2Q FY19, the company’s sunflower seed crushing volumes increased 3.3% y/y to 940.5 kt (or a 2.2x q/q jump). Bulk oil sales grew 28.9% y/y to 342 kt, or 8.8% q/q decrease. The company’s grain sales surged 2.4x y/y to 2.86mmt in 2Q19, or a 1.1% q/q plunge. Its export
76 UKRAINE Country Report February 2019 www.intellinews.com