Kernel EBITDA surges 55% yoy in FY2019

Ukraine’s largest sunflower oil producer and grain
trader Kernel (KER PW, KERPW) reported on Sep. 30 its FY2019 EBITDA surged
55.1% yoy to USD 345 mln. EBITDA growth was led by its sunflower oil segment as
oil in bulk EBITDA rose 46.9% yoy to USD 93 mln, while the company’s bottled
oil segment EBITDA advanced 19.4% yoy to USD 16 mln. Meanwhile, its farming
segment’s FY2019 EBITDA skyrocketed 2.05x yoy to USD 182 mln.

Grain trading segment EBITDA surged 77.1% yoy to USD
31 mln, while the company’s export terminals FY2019 EBITDA decreased 7.9% yoy
to USD 36 mln and silo services FY 2019 EBITDA dropped 14.0% yoy to USD 38 mln.
The company’s bulk sunflower oil EBITDA/t improved 27.7% yoy to USD 62.2/t and
bottled sunflower oil EBITDA/t rose 8.0% yoy to USD 121.6/t in FY2019.

The company reported a revenue surge of 66.2% yoy to
USD 3,992 mln and its net income jumped 2.63x yoy to USD 189 mln in FY2019. As
of June 30, 2019, the company’s net debt amounted to USD 694 mln vs. USD 622
mln a year ago. So the company’s net debt/EBITDA ratio was 2.0x as of end-June
vs. 2.8x a year ago.

Also, the company’s outlook for FY2020 is positive and
the company expects the higher capacity load and improved margins in its
sunflower oil segment.

Andriy Perederey: Kernel’s FY2019 EBITDA was slightly higher than our expected range of USD 330-340 mln mostly due to stronger farming segment results.
Going forward, our preliminary conservative estimate for sunflower oil EBITDA
in FY2020 is USD 110 mln and total company EBITDA in the range of USD 380-390
mln, based on our expectation of improving sunflower margins,