Kernel crushing volumes rise 16% yoy in 1H FY20

Oilseed crushing volumes at Ukraine’s largest sunflower
oil producer and grain trader Kernel (KER PW, KERPW) rose 15.6% yoy to 1.57 mmt
in 1H FY20 (July-December 2019), according to its operational update published
on Jan. 21. The company’s total oil sales declined 17.5% yoy to 647 kt in 1H
FY20. Kernel’s inland silos received 4.0 mmt of grains and oilseeds, or a 4.0%
yoy increase, while its export terminals throughput rose 28.9% yoy to 2.9 mmt
in 1H FY20. The company’s grain exports from Ukraine increased 24.1% yoy to 3.9
mmt in 1H FY20.

In 2Q FY20, the company’s oilseed crushing volumes
were almost flat yoy at 942.7 kt (or 49.9% qoq jump). Edible oil sales slid
8.7% yoy to 347 kt, or a 15.2% yoy increase. Kernel’s inland silos received 2.0
mmt of grains and oilseeds (10.8% lower yoy and 4.1% higher qoq), while its
terminals throughput jumped 34.7% yoy to 1.7 mmt (or 41.6% qoq rose) in 2Q
FY20. The company’s grain exports rose 29.6% yoy to 2.3 mmt, or a 39.3% qoq
rise in 2Q FY20.

Andriy Perederey: The higher
yoy supply of oilseeds boosts Kernel’s crushing volumes in 1H FY20 and we
expect high company’s crushing capacity utilization this year. Also, the increase of crops production in Ukraine
supported strong volumes for the company’s terminal and grain export
operations. Also, we expect the increase of the company’s terminals’ throughput
volumes in 2H FY20 due to new starts of grain export terminal operations. As
such, we are keeping unchanged our estimate for total company EBITDA in the
range of USD 380-390 mln in FY2020. We are also maintaining our neutral view on
KERPW bonds.