Mriya reports 1.8x growth in 1H13 sales, outlines 1.6x crop harvest growth

Farming company Mriya (MRIYA, MAYA GR) reported 78% yoy growth in 1H13 revenue to USD 97 mln, 7% yoy growth in EBITDA to USD 177 mln and a 13% yoy decline in profit to USD 115 mln, according to its operating update released on September 17.

Mriya spent USD 69 mln for CapEx projects in 1H13, down from USD 140 mln a year before. For the full year, it plans to spend USD 150-200 mln on investment, depending on an acquisition schedule (vs. USD 308 mln in 2012).

The company’s 1H13 cash EBITDA amounted to USD 69 mln, according to the company’s presentation, and LTM Cash EBITDA amounted to USD 253 mln. Mriya’s net debt increased 23% YTD to USD 454 mln as of end-1H13, with Net Debt / LTM EBITDA reportedly being at 1.7x vs. a Eurobond covenant of 3.0x.

In its operating update, Mriya stated it will increase its harvest area 19% yoy to 295,000 ha in 2013, and outlined a projected improvement in crop yields. During a conference call on September 17, a company representative predicted boosted grains and oilseed harvests by about 1.6x yoy, based on preliminary yield numbers. On currently weak prices for key grains (wheat and corn), the company will likely reduce its sales in yoy terms in 2H13 to wait for better pricing later in the season, while it’s still aiming to post non-decreasing sales and EBITDA numbers for full year 2013.

Alexander Paraschiy: Mriya’s surge in 1H13 revenue was a real surprise, considering that the farmer posted USD 5-55 mln in 1H sales over the previous three years (or 3%-17% of full-year revenue). The company explains the surge by citing its active selling of grain stockpiled as of end-2012, which indicates it started smoothing out its sales over the year.

Given that prices for the company’s key 2013 crops, corn and wheat (which account for more than 2/3 of harvest value in this season), look very low right now, we expect Mriya will again accumulate large stockpiles by end-2013. 2H13 revenue will be smaller yoy, as the company hinted. That figure, as well as a possible downgrade of IAS-41 gains in 2H13 on smaller grain prices (the company posted a USD 157 mln revaluation gain in 1H13, flat yoy), will likely lead to a decrease in both Mriya’s revenue and EBITDA in full year 2013.

All in all, we estimate the company will post 2013 EBITDA at USD 220 mln (-14% yoy), and its Net Debt / EBITDA ratio will reach 2.0x by the year end. At the same time, we see a high chance that Mriya will improve its leverage in 1H14, providing that soft commodity prices correct themselves upward.