Industrial Milk reports 2% yoy increase in revenue, EBITDA

Farmer Industrial Milk Company (IMC PW) reported a 2% yoy increase in its 9M15 revenue to USD 100.2 mln, according to its Nov. 12 filing. Corn remained its core revenue item, generating USD 73.8 mln, or 2% higher yoy. The company sold 475 kt of corn in the period, or 24% more yoy.

The company’s 9M15 EBITDA amounted to USD 57.0 mln, or 2% higher yoy. Government subsidies generated just USD 0.5 mln for the company (-65% yoy), or 0.8% of its EBITDA. IMC’s operating cash flow before working capital change decreased 8% yoy to USD 50.0 mln in 9M15. Its net profit was USD 20.1 mln, which is a significant improvement compared to 9M14 (loss of USD 14.3 mln) as the company’s foreign currency exchange losses fell 53% yoy to USD 21.7 mln.

The total debt of IMC amounted to USD 109 mln as of end-September 2015, which is flat qoq and -15% YTD. Its net debt was USD 106 mln, implying a net debt-to-LTM EBITDA ratio of 1.80x.　

Alexander Paraschiy: The company’s 9M results appeared better than we anticipated. In particular, we expected smaller EBITDA in yoy terms. The positive result can be partially attributed to a higher than we expected gain from the revaluation of agriculture produce (USD 33.7 mn, or -22% yoy), and partially to non-declining corn prices in 3Q15 (which remained at USD 155/t, or the level of 1H15). As corn prices stabilize, we expect the company’s next quarter will also prove strong. We maintain our view on IMC as one of the most promising stocks in the Ukrainian equity universe.