Kernel increases EBITDA 40% yoy to record USD 104 mln in 2QFY12

Kernel (KER PW), reported its 2Q FY2012 financials this morning: revenues grew by 5% yoy to USD 594 mln, EBITDA by 40% yoy to USD 104 mln, net income by 25% yoy to USD 65 mln. Management confirmed its FY2012 guidance: revenue of USD 2.3 bln, EBITDA of USD 370 mln, net income of USD 255 mln. The company also announced that its board made a strategic decision to build a greenfield sunflower seed crushing plant in Russia with an annual capacity of 600 kt of oilseeds (around 20% of Kernel’s current capacity), which it expects to complete within the next two years, with CapEx estimated at USD 100 mln.

Yegor Samusenko: The growth in revenues was due to a 20% yoy increase in bulk oil sales, which reflects increased sunflower seed crushing at acquired plants, while grain export volumes were down yoy due to atypical seasonality. The improved margin in the bulk oil segment was a key driver of EBITDA growth (EBIT of 14.8% vs. 11.2% in 2Q FY2011) with grain trading operations also delivering a strong 9.5% EBIT margin (vs. close to zero in the first quarter of this financial year). With Kernel’s large inventories in sunflower oil, sugar and an anticipated improvement in grain trading volumes in 2H FY2012, we expect sales to pick up in the second half of their financial year. We confirm our projections of revenue of USD 2,258 mln and EBITDA of USD 368 mln. For more details, please refer to our report dated February 9.