KSG Agro sales rise 7%, profit falls 2.3x in 2012

Farming company KSG Agro (KSG PW) increased net revenue 7% yoy to USD 37.2 mln in 2012, according to its annual report published on May 22. The company’s “adjusted EBITDA” increased 78% yoy to USD 24.6 mln, but it has not been supported by operating cash flow before working capital changes, which fell 23% yoy to USD 10.5 mln. The company’s 2012 bottom line dropped 57% yoy to USD 11.7 mln, mainly on the absence of acquisition gains in 2012 (in 2011, these gains added USD 16.3 mln to the company’s profit).

KSG Agro reported a 16% yoy increase in wheat production to 46.0 kt and 52% yoy growth in wheat sales to 29.7 kt in 2012. The production and sales of its flagship crop, sunflower, decreased 18% yoy (to 42.0 kt) and 44% yoy (to 26.9 kt), respectively. The company cited shipping trouble in December 2012 resulting from adverse weather conditions as the reason for significant decline in sunflower sales.

Alexander Paraschiy: The company’s revealed 2012 EBITDA and profit numbers are slightly above our estimates (16% and 4% better, respectively). On the other hand, we highlight that a significant part of the contribution to EBITDA was a USD 22.1 mln IAS-41 gain, out of which USD 16.1 mln was an “unrealized gain”, according to the company. We also stress that the annual report came too late onto the market (KSG Agro already reported its 1Q12 financials) and therefore doesn’t affect our expectations for the company. We are sticking to our outlook of triple-digit growth in KSG’s bottom line in 2013 (refer to our news of May 17).