Milkiland EBITDA plunges 47% in 1H16

Dairy firm Milkiland (MLK PW) reported a 24% yoy decrease in revenue to EUR 73.9 mln in 1H16, according to its earnings report released on Aug. 27. Revenue fell in all its countries of operation with the smallest decline, -19% yoy, occurring in Russia (to EUR 48.1 mln).

Milkiland’s total EBITDA plunged 47% yoy to EUR 3.4 mln in 1H16. EBITDA at the company’s Russian segment declined 43% yoy to EUR 3.0 mln, and in Ukraine it plummeted 60% yoy to EUR 1.0 mln. The company’s Poland segment EBITDA turned positive to EUR 0.06 mln (from negative EUR 0.63 mln a year before). Its net loss decreased 37% yoy to EUR 15.1 mln in 1H16.

The company’s net debt remained flat YTD at EUR 106.5 mln as of end-June 2016. Its ratio of net debt-to-LTM EBITDA worsened to 15.5x as of end-1H16 from 10.8x as of end-2015.

Alexander Paraschiy: The second quarter of 2016 turned out to be worse for Milkiland than the first one (when it generated EUR 2.0 mln in EBITDA), which suggests the company is far from turning around. Coupled with its heavy financial leverage, this prevents us from considering MLK PW as an investable stock.