KSG Agro revenue rises 46%, EBITDA drops 12% in 9M16

Ukrainian farmer KSG  Agro (KSG PW) reported a 46% yoy rise in net revenue to USD 15.1 mln in 9M16, according to its Nov. 15 filing.  Its EBITDA decreased 11.9% yoy to USD 9.4 mln, while its bottom line decreased 30% yoy to USD 2.0 mln in 9M16.

The company’s operating cash flow before working capital changes plummeted 92% yoy to USD 0.4 mln in 9M16. Its total debt remained broadly flat YTD at USD 45.3 mln, and its net debt-to-LTM EBITDA slightly increased to 2.5x as of end-September.

Igor Zholonkivskyi: KSG Agro’s 9M16 EBITDA and net margins would have increased yoy if not for the one-off USD 5 mln “other income” item reported in its 9M15 P&L statement, which significantly inflated the comparative base. Therefore, we view positively its 9M16 financial results with its EBITDA margin reported at 62%. Nevertheless, as previously reported, KSG Agro sowed an area almost twice as small (about 26,300 ha) this year as compared to the 2015 season. We assume this will have a negative effect on the company’s bottom line in 2017. Therefore, KSG Agro cannot be viewed as an attractive investment so far.