Mriya’s 1H10 gross profit grew 108 y-o-y, driven by biological assets revaluation

Mriya Agro Holding’s (FSE: MAYA GR) 1H10 total revenues declined 21% y-o-y to USD 2.0 mln, while a 108% y-o-y increase in the company’s net gain on change in fair value of biological assets to USD 137.3 mln yielded a gross profit of USD 137.4 mln (+106% y-o-y). Thus, the company’s EBIT was up 99% y-o-y to USD 122.4 mln, and net profit gained 126% y-o-y to USD 124.7 mln. As of June 30, the company’s total debt comprised USD 66.3 mln (up 26% since 2009 year-end), while its cash balance sheet item totaled USD 2.4 mln (+27% since 2009 year-end). Ruslan Patlavskyy: Given a year-long operating cycle for crop growers, we see Mriya’s half-year results as only partially representative with respect to full year performance based on a specific nature of biological assets revaluation and its substantial effect on the income statement. Based on currently contradictory news flow from sugar producers and Ukraine’s Ministry of Agriculture relating to the forecast sugar beet harvest this year, we conservatively reiterate our previous forecast for Mriya’s top line at USD 164 mln (+11% y-o-y) and EBITDA of USD 100 mln (+8% y-o-y).