Kernel crushing volumes decrease 27% yoy in 1QFY22

Ukraine’s leading farmer and seed oil producer Kernel
(KER PW, KERPW) reported a 27% yoy drop in oilseeds crushing volumes in 1QFY22
(July-September 2021) to 482.3 kt, according to its Oct. 22 operating update.
The crushing volumes decreased due to the lower supply of sunflower seeds at
the end of processing season, which was a result of poor harvest of sunflower
seed in 2020. Also, two of the company’s plants switched to rapeseed crushing
to maintain capacity utilization. As such, the company crushed 373 kt of
sunflower seeds and 109 kt of rapeseeds in 1QFY22.

The company’s edible oil sales decreased 26% yoy to
220.7 kt in 1QFY22. Kernel’s export terminals throughput rose 18% yoy to 2.2
mmt and grain export from Ukraine increased 5% yoy to 2.2 mmt.

The company’s farming results in the current season
are encouraging, as the yields of its key crops – corn, sunflower and wheat –
were 6.5% (expected), 0.9% and 26.2% more yoy. Also, the company’s volumes of
silo intake decreased 19% yoy to 1.0 mmt in 1QFY22 due to delays in the
harvesting campaigns for corn and sunflower seed.

Andriy Perederey: Kernel’s
lower crushing volumes and edible oil sales were driven by the poor harvest in
the previous season. Also, the poor availability of oilseeds had added pressure
on the company’s margins in the oilseeds segment in 1QFY22. Meanwhile, this
season’s harvest will be stronger in Ukraine, and we expect an increase of
volumes in the company’s crushing and trading segments. We continue estimating
Kernel’s FY2022 EBITDA will be close to USD 560 mln, excluding Avere operations
and keep our neutral view on KERPW bonds.