Astarta reports strong 1Q13 results

Integrated agri-holding and leading Ukrainian sugar producer Astarta (AST PW) reported on May 14 an encouraging set of results for 1Q13. The company’s revenue increased 28% yoy to EUR 82.3 mln, with all its key segments showing growth. Sales in its sugar segment rose 5% yoy to EUR 35.7 mln, mainly on growth in sugar by-products (sales of white sugar declined 5% yoy in EUR terms, despite improving 8% in volume terms). 

Crop segment sales increased 65% yoy – on both better volumes and prices – and almost reached its flagship sugar division’s sales (EUR 35.0 mln in 1Q13). The company also improved raw milk production by 12%, mostly due to an increase in milk yield per cow (+8% yoy), and raised its milk segment revenue 22% yoy to EUR 9.6 mln.

Astarta’s 1Q13 EBITDA improved largerly in line with sales, +27% yoy to EUR 23.2 mln, and was in line with operating cash flow (before working capital changes) at EUR 21.8 mln. The company’s 1Q13 bottom line improved 33% yoy to EUR 11.4 mln.

Astarta also confired its plans to commission a soybean processing plant and biogas station this fall.

Most likley, the role of Astarta’s  farming segment will further increase since the company is planning to slightly decrease sugar beet sowing this season. Total beet sowing in Ukraine declined 45% yoy this year, Astarta reported, which will play for a decline in excess supply on the sugar market this season and will be beneficial for the remaining sugar market players.

Alexander Paraschiy: Astarta’s 1Q13 results appear unexpectedly strong, so we expect a positive market reaction to that. While we see 2Q13 will be weaker (on smaller volumes and crop segment prices), 2H13 promises to be bountiful. We expect the company will show better financial results in 2H13 on a better crop harvest, higher sugar pricing, as well as additional profit on soon-to-be commissioned facilities.