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Astarta lowers grain harvest forecast by 25-30%

Astarta lowers grain harvest forecast by 25-30%

9 August 2010

Astarta (WSE: AST PW) lowered its grain harvest forecast by 25-30% for this year due to the summer drought. The average grain yield declined by 23% y-o-y to 3.5-4.0 mt/ha, whereas average barley yield slid 17% y-o-y to 2.5-3.0 mt/ha. Ruslan Patlavskyy: As a result of unfavorable weather, a 25-30% y-o-y decline in grain yields is possible for domestic grain producers this year and should drive wheat and barley prices to reach USD 210/mt (+17% y-o-y) and USD 180/mt (+16% y-o-y), respectively. Based on reported yields, Astarta is set to collect 440 ths mt of grain and oilseed, or 17% above last year’s results, which should compensate for the impact of lower yields on Astarta’s grain sales this year. This said, we reiterate our 2010E revenue forecasts for Astarta, as we conservatively approached the company’s earlier crop yield forecasts for 2010 and expect crop sales to contribute USD 88.5 mln (+32% y-o-y) to the company’s total revenues of USD 265 mln (+52% y-o-y) in 2010E. At the same time, we do not rule out a short-term negative reaction by the market to the news, pushing Astarta’s share price downward.

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