Astarta revenue decreases 18%, EBITDA falls 30% in 1Q21

Ukraine’s leading sugar producer and farmer Astarta
(AST PW) decreased its net revenue 18% yoy to EUR 82.8 mln in 1Q21, according
to its interim report published on May 19. The decline was mostly caused by a
63% yoy decrease of revenue from the farming segment (to EUR 14.6 mln) as the
company decreased sales volumes of crops by 69% yoy in the quarter. Meanwhile,
revenue in the sugar segment remained flat yoy in 1Q21 at EUR 28.8 mln, as a
25% yoy decline in the volume of sugar sold was offset by higher prices.

Astarta’s 1Q21 EBITDA was EUR 19.4 mln, or 30% smaller
yoy. The decline was also driven by a smaller result in the farming segment,
where EBITDA fell 65% yoy to EUR 7.2 mln. Meanwhile, sugar EBITDA advanced 2.9x
yoy to EUR 9.7 mln. Adjusted for non-cash revaluations, Astarta’s EBITDA was
EUR 25.8 mln, or 3% less yoy.

The company’s bottom line was positive at EUR 3.6 mln
in 1Q21, vs. negative EUR 13.3 mln a year ago (which was a result of heavy
foreign currency revaluation losses).

Its operating cash flow before working capital changes
improved 20% yoy to EUR 22.7 mln, while net cash from operations decreased 47%
yoy to EUR 26.0 mln in 1Q21. At the same time, its cash flow from investment
activities was positive at EUR 0.7 mln in the quarter (vs. negative EUR 6.0 mln
a year ago), which was a result of asset disposals for EUR 3.5 mln. The company
sold two farming units and one sugar plant (idle last year) in 1Q21. Such cash
inflows allowed Astarta to repay loans totaling EUR 22.8 mln in 1Q21.

The company’s end-March net debt was EUR 117.3 mln,
which is a 49% decline yoy and 9% decline qoq. Its net debt to LTM EBITDA ratio
reached 1.12x as of end-March, compared to 2.54x a year ago and 1.14x as of
end-December.

Astarta also reported that it had sown 206,000 ha with
key crops this season (down 3% yoy), with the corn, wheat, sunflower and
rapeseeds area declining a total of 7% yoy to 141,000 ha, the sugar beet area
remaining flat at 34,000 ha and the soybean area growing 15% yoy to 31,000 ha.

Alexander Paraschiy: The
company’s revenue is fully in line with our estimate from a month ago,
while EBITDA is below our estimate of EUR 26-27 mln with the difference caused
by agricultural produce revaluations (net of revaluation, the result is close
to our estimate). While the 1Q result is not indicative for the company’s
performance for the full year, we can already conclude that this year should be
better for the company’s P&L, primarily on better prices for crops and
sugar, with a good harvest expected. All in all, we remain positive about the
company’s ability to raise its value in the mid-term.