Astarta sugar sales fall 34% yoy, grain sales drop 45% yoy in 1Q18

Sugar sales at Ukraine’s leading sugar producer and
grain farmer Astarta (AST PW) fell 34% yoy to 92.8 kt in 1Q18, according to its
operating update published last week. Its average sugar price decreased 13% yoy
to UAH 11,619 per ton. Its total sale of key crops (wheat, corn, barley and
sunflower) dropped 45% yoy to 161.6 kt, while their average price increased 4%
yoy. The company boosted the sale of soybean oil 14% yoy to 12.6 kt (at an
average price of 5% less yoy in UAH terms) and of soybean meal 10% yoy to 42.2
kt (at a 5% higher average price). Its milk sales grew 9% yoy to 28.0 kt, while
the average price fell 2% yoy in UAH terms.

Alexander Paraschiy: The company’s
operations suggest its net revenue fell about 42% yoy to EUR 87 mln in 1Q18,
with declines in all its segments, in EUR terms. We estimate revenue declines
in its two core segments – sugar and grain – combined at 51% yoy in EUR terms.
The company’s EBITDA will likely fall even more in 1Q18.

All this confirms our view that 2018 will be worse for
Astarta in terms of P&L. At the same time, we remain cautiously optimistic
about the company’s mid-term value growth due to improved internal efficiency
and low-leverage expansion.