Kernel sunflower oil sales rise 18% yoy in 9MFY19

The sunflower seed crushing volumes at Ukraine’s
largest sunflower oil producer Kernel (KER PW, KERPW) slid 1.5% yoy to 2.26 mmt
in 9MFY19 (July 2018 – March 2019), according to a trading update published on
Apr. 18. The company’s sunflower oil sales rose 17.8% yoy to 1.17 mmt in
9MFY19, which imply sunoil bulk sales advancing 18.7% yoy to 1.1 mmt and
bottled sunoil sales climbing 13.5% yoy to 98.6 kt.

The company’s trading volumes of agricultural products
jumped 2.6x to 7.97 mmt, implying that trading volumes from Ukraine swelled
65.3% yoy to 4.7 mmt, while trading volumes from other sources surged 21.8x yoy
to 3.3 mmt in 9MFY19. These figures include the physical trading volumes
provided by Avere (the company sold 315.8 kt of sunflower oil in 3QFY19).
Export terminals throughput rose 5.8% yoy to 4.7 mmt in 9MFY19.

In 3QFY19 (January-March 2019), the company’s
sunflower crushing volumes improved 7.0% yoy to 908.2 kt (or a 3.4% drop qoq),
while total sunflower oil sales advanced 40.0% yoy to 389.6 kt (or a 4.8%
increase qoq). The results implied that bulk oil sales gained 41.1% yoy to
about 356.7 kt (or a 2.1% rise qoq) and bottled oil sales gained 29.9% yoy to
about 32.9 kt (or a 3.9% rise qoq) in 3QFY19. The company’s trading volumes
jumped 94.6% yoy to 2.1 mmt (or a 26% qoq drop).

Andriy Perederey: The company’s operating results in its core sunflower oil segment, as
well as its trading segment, will be the main drivers of EBITDA rising in
FY2019. We see that Kernel will have an ability to improve its EBITDA to about
USD 390-400 mln in FY2019 (up from USD 223 mln in FY2018) due to a stable
EBITDA margin in its sunflower segment, expectated farming contribution of
about USD 160 mln to total EBITDA and strong results in trading. We still
maintain our neutral view on KERPW bonds.