Astarta reports 17% revenue growth, 48% profit drop in 2012

Ukraine’s integrated crop and sugar producer Astarta (AST PW) reported 17% yoy revenue growth to EUR 354 mln in 2012, according to its annual report released on April 15. Its crop segment contributed the most to the growth, rising 31% yoy, while its sugar segment lagged, with only 5% growth. Its cattle farming segment showed 25% yoy growth in sales.

The company’s 2012 gross profit declined 32% yoy to EUR 83 mln, with each of its key segments showing declines, led by its sugar segment (-40% yoy). Astarta’s EBITDA decreased 23% yoy to EUR 85 mln, broadly matching its cash flow from operations (before working capital changes), which amounted to EUR 77 mln. Astarta’s net income declined 48% yoy to EUR 45 mln. The company is going to transfer the profit to its retained earnings.

The company’s net debt increased 26% yoy during 2012 to EUR 242 mln. It reported EUR 13 mln in a long-term deposit in a Cypriot bank that is “not subject to restructuring.”

Alexander Paraschiy: Astarta’s final results appeared slightly better than its preliminary numbers revealed in late February (net revenue of EUR 352 mln, EBITDA of EUR 75 mln). Given that the Polish stock market pays high attention to net income metrics, and Astarta reported net income below consensus estimates (about EUR 62 mln), we expect some negative reaction to the released financials. We believe this can create a good entry opportunity.

We remain positive on Astarta’s value growth in the mid-term, given that it’s the largest and one of the most cost-efficient sugar producers in Ukraine. Following seasons of oversupply of sugar on the domestic market, we expect a lot of players will exit to the benefit of the most efficient, surviving companies, as was the case after the 2006 oversupply in Ukraine. Meanwhile, we expect it will be Astarta’s farming and milk segments that drive its bottom line in 2013.