Astarta boosts revenue 17%, triples profit in 1H16

Ukrainian farmer and leading sugar producer Astarta reported a 17% yoy rise in net revenue to EUR 147.8 mln in 1H16, according to its Aug. 12 filing. The growth in its top line was demonstrated in all of Astarta’s segments, with the biggest increase occurring in farming, which generated EUR 35.0 mln revenue, a 67% yoy advance. Its flagship segment, sugar and sugar products, generated revenue of EUR 60.3 mln, a 2% yoy increase. Soybean processing generated EUR 38.0 mln in revenue, a 23% yoy rise.

The company’s EBITDA improved 23% yoy to EUR 109.2 mln in 1H16, with boosted VAT refunds (by 18x yoy to EUR 20.0 mln) being the key driver. However, even net of VAT refunds, the company’s EBITDA improved yoy. Better operating profit and much smaller financial costs (mainly due to the more stable hryvnia) enabled the company to post EUR 75.2 mln in net profit in 1H16, which is 3.3x higher yoy.

Astarta generated EUR 54.0 mln in cash from operating activities (+31% yoy), which enabled it to continue deleveraging (net debt decreased 17% YTD to EUR 143.8 mln) as well as expand investments (CapEx almost tripled yoy to EUR 13.3 mln). The company spent EUR 1.7 mln for M&A in 1H16 (compared to EUR 0.48 mln in 2015) and now is going to close another deal for EUR 3.0 mln.

Astarta’s net debt-to-LTM EBITDA fell to 0.95x as of end-1H16 (from 2.19x a year ago and 1.32x six months ago).

The company expressed its optimism about 2016 results, citing expectations for a strong crop harvest, strong prices for sugar and wide availability of soybeans for processing.

Alexander Paraschiy: The provided results confirm our expectations that Astarta will enjoy a strong 2016 financial year in its operation and financials. We remain bullish on Astarta stock, which now trades at an attractive EV-to-LTM EBITDA multiple of 3.0x.