Astarta revenue rises 8%, EBITDA rises 19% in 9M16

Net revenue at Ukrainian farmer and sugar producer Astarta (AST PW) rose 8% yoy in 9M16 to EUR 217 mln, according to its earnings release of Nov. 10. The growth was driven by its soybean processing segment, which generated 24.5% of revenue (EUR  53 mln), and its grain segment, whose revenue rose 20% to EUR 43 mln.  Astarta’s sugar segment demonstrated a 4% yoy decline in revenue to EUR 100 mln, as sugar deliveries dropped 11% to 237 kt. Its dairy segment revenue slid 5% yoy to EUR 17 mln.

Astarta’s 9M16 EBITDA advanced 19% yoy to EUR 129 mln, while its bottom line surged 1.9x to EUR 79 mln. The company’s cash flow from operations improved 7% yoy to EUR 55 mln while cash used for investing activities was EUR 12 mln. This allowed the company to reduce its 9M16 net debt by 23% to EUR 156 mln, while its net debt/LTM EBITDA ratio decreased to 1.0x as of end-September.

Igor Zholonkivskyi: The company has posted quite solid financial results, which enabled it to deleverage to very comfortable levels. Its soybean segment continues to outperform its main sugar segment in terms of growth, which strengthens the company’s diversification position.  In the 2016/17 marketing year, an oversupply of sugar is expected on the domestic market as volumes produced have exceeded planned consumption levels by approximately 0.5 mmt, which will put pressure on the domestic prices. However, this can be offset by the current undersupply on the global markets, where prices are at four-year highs. 

At the same time, soybean production and crushing volumes in Ukraine continue to increase, which should allow Astarta to maintain growth in this segment. We maintain a positive view of Astarta stock, provided there will not be any sudden shifts in the balance of the global sugar supply in the mid-term perspective, which might result in a strong correction in sugar prices.