Avangardco improves its P&L in 2017
29 March 2018
Ukraine’s largest egg producer Avangadrco (AVGR LI,
AVINPU) reported a 33% yoy drop in consolidated revenue to USD 127.9 mln, according
to its March 29 release. Without grain trading operations, its revenue
decreased 16% yoy to USD 118.1 mln (grain trading contributed USD 9.7 mln in
2017 vs. USD 50.2 mln a year ago). The revenue decrease was driven by a 13% yoy
average egg selling price drop to UAH 1.17/egg (or 17% yoy to USc 4.4), which
was partly offset by a 23% yoy increase in egg sales to 1.87 bln units. Shell
egg export more than doubled to 558 mln units. Sales of dry egg products fell
48% yoy to 3,264 t and their average selling price slid 23% yoy to USD 4.30/kg.
The company’s EBITDA surged 7.3x yoy to USD 12.0 mln
in 2017, while its net loss was USD 7.5 mln in 2017 vs. a USD 56.6 mln net loss
in 2016. Avangardco’s operating cash flow before working capital changes
plunged 96% yoy to USD 0.85 mln in 2017. The company’s working capital
investments were USD 20.8 mln in 2016, while CapEx plummeted 88% yoy to USD 1.6
mln in 2017. Its net debt stood at USD 347.8 mln as of end-2017, implying net
debt to EBITDA of 29x.
The company reported it would not hold any conference
call on the results due to the ongoing discussions with the ad hoc committee of
bondholders.
Andriy Perederey: Avangardco’s improved EBITDA margin is clearly a positive development,
but the profit being generated still does not enable servicing its debt.
Another positive sign is termination of non-core grain trading operations since
2H17, which disturbed the company’s P&L in 2016 and 1H17. It’s also good to
hear that the company is in active restructuring talks with its key
bondholders, but we do not expect any positive news on that side. All in all,
we retain our view that Avangardco securities are not investable.
