Kernel ups bulk oil sales, sea terminal activity 1.9x, grain sales 1.2x yoy in 1Q13

Kernel (KER PW), in its operations update for 1Q FY13, reported 89% yoy growth in bulk oil sales (but a 27% decline qoq), an 89% yoy surge in export terminal throughout (2.1x more qoq), 60% yoy growth in sunflower seed crushing activity (-37% qoq) and a 22% yoy rise in grain sales (+84% qoq). The company also reported an increase in available credit lines by 1/3 yoy to USD 1.6 bln to secure liquidity in response to higher yoy grain prices.

Kernel 1Q FY13 operational results
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                                            1Q13  4Q12   qoq  1Q12   yoy
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Grain sales, kt                        510   276   85%   417   22%
Bulk oil sales, kt                     199   273  -27%   105   90%
Exported through terminal, kt  740   355  108%   391   89%
Sunflower crushed, kt              458   727  -37%   286   60%
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Source: Company data

Alexander Paraschiy: The comparison to last quarter and yoy data shows a broadly mixed picture in Kernel’s grain trading and sunflower oil segments, which points into some changes in the seasonality of the company’s operations – Kernel highlighted high carried-forward inventories of sunflower seed and oil from 4Q12. Kernel explains the spectacular growth in export terminal operations from high demand for export services in the quarter, but this does not look sustainable for the rest of the year. The key risk for the future is possible grain export limitations the government can pursue in the 2013 calendar year in response to the smaller harvest this season and (in case local currency devalues) food price inflation. All in, the 1Q results do not look indicative of the company’s FY13 operations.