Ukraine Markets Daily (November 10, 2016)

Market news

  • Astarta reports EUR 79 mn net profit in 9M2016

Market comment

The UX index was down by 0.7% Yesterday, and the PFTS index decreased by 0.4% (in UAH terms). The WIG-Ukraine index was down by 0.7%. On the interbank exchange market, the USD/UAH was down by 0.4% to UAH 25.47 (mid price), according to Bloomberg. The official exchange rate reported by the NBU was UAH 25.56.


Astarta reports EUR 79 mn net profit in 9M2016

On November 10, 2016 the Agri-industrial holding ‘Astarta’ (Astarta) published its interim financial report for January-September of 2016. The consolidated revenue increased by 8.2% y/y to EUR 216 mn, leaving a profit before tax of EUR 79.3 mn (+208.8% y/y), and ending in a net profit of EUR 78.6 mn (+191% y/y). Export sales contributed to over 45% of the company’s revenues, according to the report. The revenue from the sugar and related sales declined by 3.5% y/y to EUR 100 mn, whereas the agricultural business increased by 20.8% y/y to EUR 116 mn, thanks to crops (+20% y/y) and soybean (+35.7% y/y). Recovery of assets previously written off (EUR 8 mn), together with substantial reduction of foreign currency exchange loss (-75.5% y/y) mostly contributed to the improvement in net profits. Astarta’s operating cash flow increased by 7.7% y/y to EUR 55 mn. The company used EUR 13 mn in investing activities, involving a placement of EUR 16 mn on bank deposits (+295% y/y), EUR 18 mn expenditures on purchase of plants and equipment, while withdrawing EUR 25 mn from deposit accounts. Financing activities ended in a cash outflow of EUR 35 mn (-43.6% y/y), mostly attributed to repayment on loans and borrowings (+20.1% y/y). Astarta’s total assets increased by 17.3% y/y and amounted to EUR 529 mn, mostly on expansion of property, plant and equipment (+14.2% y/y), inventories (+14.5% y/y), and cash balance. The company reported a balance of cash and cash equivalent in the volume of EUR 24 mn, increasing from EUR 5 mn for the corresponding period of the previous year, and from EUR 17 mn at the start of 2016. In the meantime, the company’s liabilities contracted by 3.6% y/y to EUR 235 mn, thanks to a reduction of the volume of loans and borrowings (-33.2% y/y). The company’s total equity grew by 41.9% y/y to EUR 294 mn mostly on retained earnings (+25.9% y/y) and revaluation surplus (+57.8% y/y). The company reported a 19.3% y/y increase in EBITDA, standing at EUR 129 in nine months, and allowing an EBITDA margin of 60%. In the meantime, the net debt of the company amounted to EUR 156 mn (-23.4% y/y), sending the Net Debt to EBITDA ratio to 1.03, down from 1.66 in nine months of 2015.

Our view:

The news is POSITIVE showing the company to have been able to mitigate the impact of the unsupportive domestic environment by strengthening its external positions, while redistributing its operations towards the crop segment. We note the strong cash generating capacity of the company, allowing at the same time reducing the debt burden on the company, while securing needed resources for investments. We estimate that the company will continue benefitting from the latest pattern of raising dairy and sugar prices on the domestic and international markets.