Industrial Milk company revenue rises 40% in 1Q17

The net revenue of grain farmer Industrial Milk Company (IMC PW) rose 40% yoy to USD 40 mln in 1Q17, according to its May 18 report. The increase was caused by larger sold volumes of corn, which is the company’s major crop (up 33% yoy to 223 kt). 

The company reported negative EBITDA of 0.18 mln (vs USD 5.8 mln last year). Its net debt marginally increased in 1Q17 to USD 81.9 mln (vs USD 80.9 mln in 1Q16).  Its net cash flow from operating activity almost doubled to USD 12.3 mln. Its net debt to LTM EBITDA stood at 1.5x in 1Q17 vs 1.4x in 1Q16.

Igor Zholonkivskyi: The first quarter of the year is normally not indicative for IMC. However, it is evident that the company has been able to maintain a healthy level of debt on its balance sheet. The key development to watch will be whether Industrial Milk will be able to fulfill its land bank expansion strategy (from a current 136,600 ha to 156,600 ha in 2017 and to 206,600 ha in 2020). We continue to think IMC PW is one of the top pics in the Ukrainian equity universe.