IMC reports 24% drop in 9M17 EBITDA

Farming company IMC (IMC PW) generated USD 81.5 mln in
net revenue in 9M17 (a 2% yoy rise), according to its Nov. 17 report. As usual,
corn remained the key revenue contributor, accounting for 74% of the company’s
total revenue, or USD 60.0 mln.

The company’s cost inflation, which exceeded crop
price growth, caused a 9% yoy decrease in gross profit to USD 51.1 bln.
Furthermore, inflated SG&A costs (a 52% yoy rise to USD 13.3 mln) caused a
24% yoy decline in EBITDA to USD 42.8 mln. Net income declined 8% yoy to USD
27.6 mln in 9M17.

IMC continued to reduce its leverage, repaying net USD
16.4 mln in 9M17. Its total debt decreased 15% YTD and 8% qoq to USD 70.7 mln
as of end-September. Its net debt amounted to USD 63.7 mln (-20% YTD), while
its net-debt-to LTM EBITDA ratio was 1.4x as of end-September.

Alexander Paraschiy: As we expected, IMC’s EBITDA is worsening this year, and most
likely it will be even weaker next year as the company had a weaker harvest of
key crops in the current season. Nevertheless, we remain positive about IMC
stock’s mid-term growth, taking into account the company’s strong balance sheet
and appealing forward EV/EBITDA multiple of 3.6x.