IMC reports 2.6x increase in 2012 revenue

Industrial Milk Company (IMC PW) reported 2.59x yoy growth in 2012 net revenue to USD 75.2 mln, mostly on doubled farming operations.  The key contributors to revenue growth were sales of sunflower seeds, which increased almost 150x yoy and wheat (up 16x yoy). While sales of these two crops generated just 2% of IMC’s revenue in 2011, their contribution to total revenue increased to 38% in 2012. Revenue from the sales of its flagship crop, corn, increased 90% yoy to USD 30.8 mln, while its share in total sales declined to 41% in 2012 (vs. 56% a year before). IMC’s only declining segment in 2012 was milk, sales of which fell 4% yoy. Milk’s share in the company’s total revenue fell to just 8% from 23% in 2011.

The company’s normalized EBITDA, as presented by IMC, increased 25% yoy to USD 32.0 mln in 2012. This number, however, was far above operating cash flow before working capital change, which amounted to just USD 4.1 mln (-26% yoy). IMC reported net profit of USD 18.7 mln (+8% yoy).

Industrial Milk also provided its long-term growth outlook in its annual report, with a targeted land bank of 285,000 ha by 2019 (13% CAGR) and targeted EBITDA of USD 185 mln in 2019.

Alexander Paraschiy: The company’s 2012 top line is slightly above our estimates (USD 72.2 mln), while its reported EBITDA number is below our expectations. We are slightly concerned about the company’s low operating cash flow generation, on the background of strong P&L. Nevertheless, we still treat the company as one of most remarkable growth stories for this year, and we remain bullish on IMC.