Kernel crushing volumes rise 6% yoy in 4QFY16
20 July 2016
Ukraine’s largest sunflower oil producer Kernel (KER PW) reported on July 20 that it reduced its 4QFY16 (April-June 2016) bulk oil sales by 30% yoy to 209 kt. In its trading update, the company said it intends to rebuild its inventories, with the expectation of stronger demand in 1QFY17 (July-September 2016). Bulk oil sales fell 4% yoy during FY2016 to 984 kt.
Crushing volumes remained strong in 4QFY16, having increased 6% yoy to 647 kt. Meanwhile, FY2016 crushing volumes of 2.684 kt (+6% yoy) reached the higher bound of management’s guidance of 2.5-2.7 mmt.
Grain sales in 4QFY16 fell 6% yoy to 744 kt, causing the annual result to decline 7% yoy 4.4 mmt. Kernel attributed the lower operating result of its grain trading segment to lower farmer stocks at the end of the season. Export terminals throughput grew 6% yoy in 4Q16 and increased 11% yoy in FY2016 to 5.3 mmt as a result of debottlenecking of the grain transshipment facility in Ukraine and the installation of additional storage capacity in the Russian port of Taman.
Roman Topolyuk: The reported sales of bulk oil comes in 9% lower than we projected for FY2016. The unexpected result was caused by the company’s decision to push sales of inventories into next financial year. This will impact EBITDA in FY2016. We now downgrade our EBITDA forecast by 7% to USD 332 mln in FY2016. Kernel’s stock trades at EV/EBITDA of 4.0x, which we still find to be an attractive valuation. Since we see robust potential for Kernel’s FY2017 financial performance, we affirm our BUY recommendation for the stock.
