Kernel EBITDA more than doubles in 1QFY21

Ukraine’s largest sunflower oil producer Kernel (KER
PW, KERPW) EBITDA jumped 2.7x yoy to USD 290 mln in 1QFY21 (July-September
2020), according to its report published on Nov. 27. The company’s oilseed
processing segment generated USD 31 mln of EBITDA, or 41% more yoy in 1QFY21.
The company’s EBITDA per ton of oil rose 41% yoy to USD 104.0 in 1QFY21. Its
infrastructure and trading segment EBITDA increased 3.2x yoy to USD 111 mln and
its farming segment EBITDA rose 2.8x yoy to USD 161 mln in 1QFY21.

Kernel’s revenue rose 11% yoy to USD 940 mln in
1QFY21. Its oilseed processing segment revenue slid 1% yoy to USD 293 mln in
1QFY21. Its infrastructure and trading segment revenue increased 17% yoy to USD
811 mln, while its farming segment revenue declined 33% yoy to USD 90 mln in
1QFY21.

Kernel’s net profit rose 3.4x yoy to USD 204 mln in
1QFY21. Its operating cash flow before working capital changes increased 3.3x
yoy to USD 189 mln. The company’s net debt was USD 1,017 mln on Sep. 30 (vs.
USD 1,144 mln a year ago) and its net debt-to-LTM EBITDA ratio improved to 1.6x
from 3.3x a year ago.

Andriy Perederey: The rise in sunflower oil prices supported the company’s oilseed
processing margin, while it sees a risk that its EBITDA margin will slide to
below USD 100/t at the end of the 2020 season. Also, the company’s
infrastructure and trading segment EBITDA growth was driven by profitable Avere
trading activities, while segment margins were lower yoy in 1QFY21. Kernel’s
farming segment EBITDA was boosted by positive price dynamics for crops and a
revaluation of biological assets which contributed USD 107 mln in 1QFY21. So,
we are likely to see some decrease in Kernel’s EBITDA in the next quarters, and
we remain neutral on KERPW bonds.