KSG Agro revenue drops 13%, EBITDA plunges 91% in 1Q19

Ukrainian farmer KSG Agro (KSG PW) reported a 12.5%
yoy revenue drop to USD 3.4 mln in 1Q19, according to its June 3 financial
statement. The company’s EBITDA plunged 90.7% yoy to USD 0.27 mln, while its
operating profit turned to negative USD 0.05 mln in 1Q19 vs. USD 2.6 mln a year
ago. The company’s COGS increased 48.6% yoy to USD 4.2 mln in 1Q19. The
company’s net income rose 57.3% yoy to USD 3.5 mln due to finance income of USD
4.4 mln, which the company mainly obtained as the result of debt restructuring
of a loan from an equipment supplier.

The company’s operating cash flow before working
capital changes turned to negative USD 0.76 mln in 1Q19 vs. USD 1.0 mln a year
ago. Its total debt decreased 17.3% yoy to USD 39.2 mln, while the company’s
LTM EBITDA was USD 0.08 mln.

Andriy Perederey: The company’s weak 1Q19 financials are the result of a COGS jump,
while the one-off financial income supported its bottom line. The company’s
reduced debt didn’t improve financial leverage owing to the low LTM EBITDA. KSG
Agro shares remain a risky investment.