Ovostar egg production increases 24% in 2016
24 January 2017
Ukrainian egg producer Ovostar (OVO PW) boosted egg production by 24% yoy to 1,479 mln units in 2016 while shell egg sales rose 22% yoy to 1,054 mln units for the same period, the company reported on Jan. 23 in its operations update. The average selling price of shell eggs remained mostly flat, reaching 1.35 UAH/egg from 1.38 UAH/egg in 2015.
Sales volume of liquid egg products increased 30% yoy to 8,689 tons, out of which 2,016 tons were exported, mostly to EU countries. Sales volume of dry egg products increased 9% yoy to 2,125 tons, while volume of dry egg product exports surged 45% yoy to 1,320 tons, which amounted to 62% of the total sales in this business segment.
Ovostar’s total hen flock increased 16% yoy to 7.6 mln, while its laying hen flock advanced 22% yoy to 6.5 mln.
Igor Zholonkivskyi: The reported operation results are quite robust per se. However, due to declining egg prices in USD terms (a 17% drop yoy as of Sept. 16), the company is likely to report a decrease in EBITDA of up to 40% yoy, with profitability hurt by higher prices for fodder components. These prices inflated the cost of sales by about 20% yoy in 9M16.
On the positive side, Ovostar net debt/LTM EBITDA stood at 0.45x as of 9M16, which is among the lowest in Ukraine’s equity universe. We expect that gradually improving macro conditions in Ukraine, and a relatively stable USD/UAH rate in 2017, will enable the company to return to modest profitability growth in 2017.
