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.