Astarta posts 23% revenue decline, improves profit 94% in 1H15

Ukraine’s leading sugar and soybean market player Astarta (AST PW) reported a 23% yoy decline in its net revenue to EUR 126.3 mln in 1H15, according to its Aug. 18 filing. The decline was observed in all the segments and was mainly caused by a 41% devaluation of the company’s functional currency, the hryvnia, vs. euro. The company’s COGS declined 32% which resulted in improved gross profit of its business segments. At the same time, a 27% yoy decline in its IAS 41 gains (to EUR 47.7 mln) resulted in overall gross profit fall by 15% yoy to EUR 93.9 mln. Smaller gross profit and a 10x yoy decline in VAT refunds (to EUR 1.1 mln) resulted in a 22% decline in Astarta’s  EBITDA to EUR 88.6 mln in 1H15. However, its net profit improved 94% yoy to EUR 22.8 mln, mainly thanks to a 47% yoy decrease in foreign currency translation losses, to EUR 41.4 mln.

Astarta generated EUR 41.1 mln in operating cash flow (-47% yoy) and cut its net CapEx 31% yoy to minor EUR 4.8 mln in 1H15. This allowed the company to deleverage: in 1H15, it repaid net EUR 31.0 mln in debt. The company’s net debt decreased 5% YTD to EUR 206.1 mln, while its Net Debt to LTM EBITDA ratio increased to 2.2x as of end-1H15 (vs. 1.9x as of end-1H14 and 1.8x as of end-2014).

Alexander Paraschiy: The company’s results are in line with global and local soft commodity trends and in line with our expectations. In the second half of the year, we expect improvement in Astarta’s top line, on smaller currency devaluation effect and improvement in prices for its key products. This, however, won’t allow the company to demonstrate increase in its top line and EBITDA in EUR terms in full-year 2014. As we do not expect any new currency shock, the company’s bottom line is very likely to improve further in 2H15. Operationally and financially, the company remains strong, and we keep our cautiously optimistic view at its value growth potential for the mid-term.