Avangard raises bottom line 43% yoy in 2012

Ukraine’s leading egg producer Avangard (AVGR LI) reported USD 629 mln in 2012 revenue, according to its annual report released on March 5. EBITDA improved 38% yoy to USD 280 mln, while cash flow from operating activities (before working capital changes) grew only 11% yoy (to USD 249 mln). The company posted USD 196 mln in profit for the year, up 43% yoy. Its net debt increased 1.8x yoy to USD 148 mln and its cash position remained strong at USD 204 mln. During a March 5 conference call, representatives said Avangard might consider paying dividends, most likely next year.

Alexander Paraschiy: The company’s 2012 results are expectedly robust, a tendency that will extend into 1Q13 as egg prices continue to be relatively strong. Such strength is under threat for the rest of that year however, primarily due to Avangard’s expansion plans that can lead to excess supply on the market. So far, the company hasn’t undermined the market’s shaky equilibrium, which raises the chances that it will be able to continue raising its production smoothly without visible harm to its profit.

Unlike its peer MHP (MHPC LI), which reported its earnings the same day, Avangard did not provide a surprise in the form of dividends, even though – like the poultry producer – it plans to significantly scale down its CapEx compared to previous years. It’s clear that the egg producer is better suited for dividend payouts since it’s much less leveraged than MHP (end-2012 net debt/EBITDA is 0.5x vs. MHP’s 2.3x) and more cash-rich.