Avangard sales jump 6%, profit falls 16% in 1Q13

Ukraine’s leading egg producer Avangard (AVGR LI) released 1Q13 operating and financial results on May 30. The company increased its revenue 6.3% yoy to USD 155.8 mln, driven mainly by doubled revenue in its egg products segment (to USD 25.6 mln). The revenue in its main segment, shell eggs, was flat yoy at USD 111.1 mln, as a 9.3% growth in delivery volumes was offset by an 8.1% decline in average prices.

The company explained the lower pricing in 1Q13 by the fact that Orthodox Easter (a time of seasonal increase in egg demand) came in May this year (vs. mid-April a year before). Avangard also reported decreased shell egg exports (-7.4% yoy) stemming from suspended shipments to Syria, which have since resumed. The company’s 1Q13 EBITDA amounted to USD 73.1 mln, down 13.3% yoy, on both lower egg prices and increased production costs. Net profit fell 16.0% in the quarter to USD 60.7 mln.

Alexander Paraschiy: Falling profit never looks encouraging, but in the case of Avangard we see a high chance that it will deliver growth in all its financials for FY 2013, mainly on the commissioning of new, more cost-efficient capacities. We also expect the company’s 2Q13 will be slightly stronger on the “Easter factor.” We remain cautiously positive on Avangard’s 2013 outlook, stressing again that the main risk for the company is related to possible oversupply of shell eggs on the domestic market if the company boosts its output too fast.