Astarta boosts EBITDA 38% yoy, cuts net debt 26% YTD in 1H14

Обзоры по компаниям и отраслям 19.08.2014 Ukraine’s largest sugar producer Astarta (AST PW) reported a 14% yoy increase in revenue to EUR 188.0 mln 1H14, according to its earnings report released on Aug. 18. The core contributor to its revenue growth was a new soybean processing plant, which added 22%. In its flagship sugar segment, the company’s revenue remained flat yoy at EUR 93.7 mln as lower sugar supply volumes (-13% yoy) were offset by higher sugar prices. The situation was the opposite in its milk segment: revenue fell 7% yoy (to EUR 18.3 mln) despite higher volumes (+14% yoy) as prices were weaker due to Russia's import ban on Ukrainian dairy products, which prevented milk prices from increasing in line with UAH devaluation. The company’s EBITDA grew 38% yoy to EUR 105.7 mln in 1H14, fueled by an increase in sugar segment profitability and a new soybean product segment. Due to EUR 78.0 mln in ForEx losses, Astarta’s bottom line for the period was only EUR 3.5 mln (down from EUR 52.3 mln in 1H13). The company’s operating cash flow improved 80% yoy to EUR 78.8 mln, while cash flow before working capital changes increased 2.9x yoy to EUR 49.4 mln, still significantly lagging its reported EBITDA number. Astarta managed to decrease leverage during the period: following payouts during the first two quarters, its net debt declined 26% YTD to EUR 194.7 mln as of end-June 2014, and net debt to LTM EBITDA declined to 2.0x from 3.9x as of end-2013. Alexander Paraschiy: The results of Astarta’s soybean processing segment was a key positive surprise for us. Nevertheless, its sugar business remains the core contributor to the company’s bottom line (having generated 57% of gross profit), and we expect it will remain so in 2H14. At the same time, we expect the second half will be traditionally weaker for Astarta, given that the costs of the new harvest will be much higher, yoy. All in all, we are upgrading our forecast for Astarta’s full-year EBITDA to EUR 94 mln, still leaving some room for surprise on the upside.