IMC revenue rise 4%, EBITDA jumps 30% yoy in 2018

Ukrainian farmer IMC (IMC PW) posted a 3.8% yoy
increase in revenue to USD 131.6 mln in 2018, according to its annual report published
on May 1. The company generated USD 50.8 mln in EBITDA in 2018, or 30% higher
yoy. Its key revenue drivers were higher sales volumes of sunflower seed and
soybeans and higher prices for corn and wheat. Its revenue from corn sales, the
key company’s main crop, contributed USD 81.6 mln to total revenue, or a 3% yoy
increase. The company’s net income swelled 55% yoy to USD 27.6 mln in 2018.

IMC’s operating cash flow before working capital
changes decreased 4% yoy to USD 37.4 mln in 2018, and its net cash flow from
operations decreased 13% yoy to USD 28.2 mln. Its CapEx was USD 5.2 mln, or
flat yoy in 2018. The company’s total debt decreased 9% yoy to USD 59 mln and
its net debt slid 13% yoy to USD 53 mln at the end of 2018. Its net
debt-to-EBITDA ratio was 1.04x as of end-2018 vs. 1.55x a year ago.

Andriy Perederey: The company has adhered to its strategy of reducing its debt, which is
a positive development. At the same time, we are concerned about IMC’s reported
net gain from changes in the fair value of biological assets and agricultural
produce, which increased 17% yoy to USD 73.3 mln and is higher than company’s
five-year average by 33%. That was a key contributor to IMC’s EBITDA growth,
mathematically, but such EBITDA improvement has not been supported by the
company’s cash flow stateme nt, where key operating metrics worsened. All this
might suggest the company was doing its best to maximize its key P&L
metrics, possibly preparing for some corporate event.