Kernel EBITDA surges 2.1x yoy in 9MFY21

Ukraine’s largest sunflower oil producer and grain
trader Kernel (KER PW, KERPW) generated EBITDA of USD 670 mln in 9MFY21, a 2.1x
yoy surge, according to its earnings report released on May 28. The increase
was driven by its infrastructure & trading segment, in which EBITDA surged
2.5x to USD 394 mln in 9MFY21, and its farming segment, in which EBITDA jumped
2.6x yoy to USD 270 mln in 9MFY21. The company’s oilseed processing segment
EBITDA dropped 30% yoy to USD 62 mln in 9MFY21 and its segment EBITDA margin
worsened 33% yoy to USD 57/t.

Kernel’s revenue rose 37% yoy to USD 3,996 mln in
9MFY21. Its oilseed processing segment revenue increased 25% yoy to USD 1,300
mln while its infrastructure and trading segment revenue rose 39% yoy to USD
3,432 mln in 9MFY21. Its farming segment generated USD 430 mln revenue, which
is 13% lower yoy.

Kernel’s net profit jumped 4.6x yoy to USD 348 mln in
9MFY21. The company’s net debt slid to USD 1,073 mln as of Mar. 31 (vs. USD
1,334 mln a year ago) and its net debt-to-LTM EBITDA ratio improved to 1.4x vs.
3.5x a year ago.

In 3QFY21, the company’s revenue rose 66% yoy to USD
1,729 mln (or 30% increase qoq) and its total EBITDA rose 8% yoy to USD 112 mln
(or 58% lower qoq). The key driver of the company’s EBITDA was Avere trading operations
which are included in the company’s infrastructure and trading segment.

Also, Kernel updated its FY2021 outlook where the
company expected its oilseed processing segment EBITDA would be lower yoy in
FY2021 (and segment’s EBITDA margin would be USD 45-55/t), total infrastructure
and trading segment EBITDA would be above USD 400 mln and its farming segment
EBITDA would be at USD 230 mln.

Andriy Perederey: The
company’s strong financial results were supported by its farming segment and
Avere trading operations due to growth of soft commodity prices, while margins
in the Ukraine-based infrastructure, trading and oilseed segments decreased. We
expect that the next harvest season results in Ukraine will be better due to
favorable weather conditions in spring. Also, after the company’s outlook
update, we estimate Kernel’s total EBITDA in the range of USD 738-749 mln in
FY2021. We expect that Kernel’s strong interim results will be cheered by the
stock market.