Avangardco claims to be largest egg supplier in Ukraine

Avangardco claims to be largest egg supplier in Ukraine

Profits at Ukraine egg processor Avangardco slumped in the first quarter of the year as the company felt the impact of the devaluation of the country's currency, the hyrvnia.

Net profit fell 23% to US$46.8m, with EBITDA down 17% at $60.9m, the London-listed company said today (23 May). Revenue slid 2% to $151.2m. 

"Revenue in our main business segments, shell eggs and dry egg products, increased by 7% year-on-year as a result of doubling of the production and sales of dry egg products. However, our consolidated revenue declined by 2% year–on-year due to the impact of the Ukrainian hryvnia devaluation against the US dollar, our reporting currency," CEO Irina Marchenko said.

However, Avangardco, which claims to be the number one egg producer in Eurasia, noted exports jumped 71%. Sales outside Ukraine accounted for 40% in the quarter, up from 23% a year earlier.

Show the press release

AVANGARDCO INVESTMENTS PUBLIC LIMITED

 

FINANCIAL AND OPERATIONAL RESULTS FOR THE FIRST QUARTER OF 2014 

 

?yiv, Ukraine – AVANGARDCO INVESTMENTS PUBLIC LIMITED (LSE: AVGR) (the “Company” or “AVANGARDCO IPL”), the largest producer of shell eggs and dry egg products in Ukraine and number one producer in Eurasia, today announces its financial and operational results for the first three months ended 31 March 2014.

 

Financial Highlights

§  Consolidated revenue decreased by 2% year-on-year to US$152.2 mln (Q1 2013: US$155.8 mln)

§  Revenue derived from two main business segments, shell eggs and dry egg products, grew by 7% year-on-year to US$ 146.9 mln (1Q 2013: US$ 136.7 mln)

§  Revenue from the export of eggs and dry egg products increased by 71% year-on-year to US$ 61.6 mln (Q1 2013: US$ 36.0 mln) and accounted for 40% of the Company’s consolidated revenue (Q1 2013: 23%).

§  EBITDA amounted to US$ 60.9 mln (Q1 2013: US$73.1 mln) with EBITDA margin of 40%

§  Net profit decreased by 23% year-on-year to US$46.8 mln (Q1 2013: US$ 60.7 mln)

 

Operational Highlights

§  Production of shell eggs was up by 14% year-on-year to 1.889 bln pieces (1Q 2013: 1.654 bln pieces)

§  The average sales price of shell eggs decreased by 1.5% year-on-year and amounted to UAH 0.67 per unit, excluding VAT  (Q1 2013: UAH 0.68 per unit, excluding VAT)

§  Export  volumes of shell eggs increased by 57% year-on-year to 162 mln pieces (1Q 2013: 103 mln pieces)

§  The volume of processed shell eggs increased to 584 mln pieces (1Q 2013: 271 mln pieces)

§  The production of dry egg products doubled year-on-year to 6,802 tonnes (Q1 2013: 3,399 tonnes)

§  Export of shell eggs and dry egg products amounted to 788 mln eggs in egg equivalent (1Q 2013347 mln eggs in egg equivalent),representing around 43% of the Company's total sales volume

§  The average sales price of dry egg products decreased by 9% year-on-year to US$7.04/kg (Q1 2013: US$7.71/kg)

§  Total flock increased by 25% year-on-year to 34.1 mln (Q1 2013: 27.2 mln). The number of laying hens grew by 19% year-on-year to 26.5 mln (Q1 2013: 22.3 mln)

 

Irina Marchenko, Chief Executive Officer of AVANGARDCO IPL, commented:

In the first quarter 2014 revenue in our main business segments, shell eggs and dry egg products, increased by 7% year-on-year as a result of doubling of the production and sales of dry egg products. However, our consolidated revenue declined by 2% year–on-year due to the impact of the Ukrainian hryvnia devaluation against the US dollar, our reporting currency. Share of export revenue continued to grow and accounted for 40% of total revenue, reaching US$ 62 mln.

 

Both net profit and EBITDA were impacted by the Ukrainian hryvnia devaluation. Despite these developments AVANGARDCO IPL’s business operations continued to perform strongly. 

 

During 2014 we expect strong demand for our products. The Company will continue to pay close attention to the development of export markets with an objective to further increase the volume of export sales while maintaining focus on the cost control”.

 

# # #

Financial Summary:

 

 

Units

Q1 2014

Q1 2013

Change

Revenue

US$ ‘000

152,199

155,823

(2%)

Gross Profit

US$ ‘000

59,745

62,198

(4%)

Gross Profit Margin

%

39.3%

39.9%

 

EBITDA

US$ ‘000

60,940

73,103

(17%)

EBITDA Margin

%

40.0%

46.9%

 

Operating Profit

US$ ‘000

54,497

69,438

(22%)

Operating Margin

%

35.8%

44.6%

 

Net Profit

US$ ‘000

46,799

60,699

(23%)

Net Profit Margin

%

30.7%

39.0%

 

 

In the first quarter 2014, the Company's consolidated revenue was down by 2% year-on-year and amounted to US$152.2 mln (Q1 2013:US$155.8 mln) due to the devaluation of the Ukrainian hryvnia  as nearly 60% of the Company’s revenue comes from sales in the domesticmarket.

In the first quarter 2014, the Company’s revenue derived from its two main business segments, shell eggs and dry egg products, grew by 7% year-on-year to US$ 146.9 mln (1Q 2013: US$ 136.7 mln) due to an increase in the production and sales of dry egg products.

The Company’s revenue from the export of shell eggs and dry egg products increased by 71% year-on-year to US$ 61.6 mln (Q1 2013: US$ 36.0 mln) and accounted for 40% of the consolidated revenue (Q1 2013: 23%), which is in line with the Company’s strategy to grow its export revenues.

In the first quarter 2014, despite the significant growth of production, the cost of sales slightly decreased to US$ 101.7 mln (Q1 2013: US$102.5mln). This was due to the Company maintaining significant stocks of raw materials.

In the first quarter 2014 the Company’s gross profit decreased by 4% year-on-year to US$ 59.7 mln (Q1 2013: US$ 62.2 mln) due to the decrease in revenue in the US dollar terms. Gross profit margin remained at 39.3% (Q1 2013: 39.9%).

EBITDA decreased by 17% year-on-year to US$ 60.9 mln (Q1 2013: US$ 73.1 mln) which was mainly due to the devaluation of the Ukrainianhryvnia against the US dollar. It was further impacted by lower prices for dry egg products due to increase of sales volumes to new and exciting customers, and a related increase in marketing costs to promote the Company's products. EBITDA margin stood at 40.0% (Q1 2013: 46.9%).

In the first quarter 2014, net profit decreased by 23% year-on-year to US$46.8 mln (Q1 2013: US$ 60.7 mln).

Debt Structure

As of 31 March 2014, the Company’s total debt increased to US$ 335.9 mln (31 December 2013: US$ 322.8 mln).

At the end of reporting period the Company’s net debt amounted to US$ 157.4 mln  (31 December 2013: US$ 166.0 mln). The decrease in net debt was due to an increase in cash balance. As of 31 March 2014, cash and cash equivalents amounted to US$ 178.5 mln (31 December 2013: US$156.8 mln).

AVANGARDCO IPL’s Eurobond issue with a maturity on 29 October 2015 amounted to 59% of the Company’s total outstanding debt.

The Company’s total debt/LTM EBITDA ratio stood at 1.16, which is significantly below its Eurobond covenants.

Original source: Avangardco