Kernel EBITDA jumps 68% yoy in 2QFY19

Ukraine’s leading sunflower oil producer and grain
trader Kernel (KER PW, KERPW) reported on Feb. 28 its 2QFY19 EBITDA reached USD
129.3 mln, which is a 67.9% yoy jump and 28.5% qoq improvement. The company’s
2QFY19 revenue was USD 1,115 mln, more than double yoy and 2.2% less qoq.

Its 2QFY19 EBITDA in its bulk oil segment improved
2.0x yoy (or 2.5x qoq) to USD 35.1 mln, while EBITDA ton of oil increased 54.2%
yoy (or 2.7x higher qoq) to USD 100.4 in 2QFY19. The company’s grain trading
EBITDA decreased 14.5% yoy (or a 70.7% qoq plunge) to USD 7.1 mln and its
export terminals division’s EBITDA slid 2.9% yoy (or 19.3% higher qoq) to USD
9.9 mln in 2QFY19. Its silo services division contributed USD 23.4 mln to total
EBITDA, which is a 21.5% yoy decrease (or 4.0x qoq surge). The company’s
farming division EBITDA advanced 3.4x yoy (and 17.0% qoq) to USD 61.8 mln.

In 1HFY19, the company’s revenue more than doubled yoy
to USD 2,255 mln, while its total EBITDA jumped 1.9x yoy to USD 229.9 mln.

Andriy Perederey: The company’s 1HFY19 EBITDA was higher than our estimates due to stronger sunflower oil segment EBITDA and
better results in silo storage and farming. Also, the company’s sunflower oil
EBITDA margin was higher than our expectations. We expect a positive stock market reaction to the results, while still
maintaining our neutral view on KERPW bonds.