Astarta increases sugar sales 13% yoy, decreases grain sales 36% in 2Q18

Ukraine’s leading sugar producer and grain farmer
Astarta (AST PW) increased sugar sales 13% yoy to 91.7 kt in 2Q18, according to
its operating update published on July 20. Its average sugar price decreased
23% yoy to UAH 10,450 per ton.

Its total sale of key crops (wheat, corn, barley and
sunflower) dropped 36% yoy to 125.5 kt in 2Q18, while their average price
increased 29% yoy in UAH terms. The company’s soybean oil sales dropped 14% yoy
to 9.2 kt (at an average price of 2% less yoy in UAH terms) and of soybean meal
11% yoy to 26.4 kt (at a 15% higher average price). Its milk sales decreased 1%
yoy to 26.4 kt, while the average price grew 11% yoy in UAH terms.

Alexander Paraschiy: Based on the published operating data, we estimate that Astarta’s
revenue amounts to EUR 85.5 mln in 2Q18 (down 16% yoy) and EUR 176.1 mln in 1H18
(down 30% yoy). The company’s 2Q18 and 1H18 EBITDA will largely depend on the
revaluation of its biological assets and agricultural produce (IAS 41 gain),
and thus will be mostly a function of Astarta’s 2018 harvest estimate. So far,
general expectations on Ukraine’s harvest are optimistic, based on the weather
conditions, thus promising better crop yields for Astarta this year. That means
Astarta’s EBITDA should significantly improve in 2Q18 (from a 69% yoy decline
in 1Q18). Thus far, however, we expect key company’s P&L items will be
worse yoy in 2018. Nevertheless, we remain cautiously optimistic about
Astarta’s mid-term value growth.