Ovostar Union, one of the leading producers of eggs and egg products in Ukraine, posted a net profit of $13.3 million in the first half of 2024, down 35.4% year-on-year, due to higher feed costs and falling prices for finished products.
According to the group’s report on the Warsaw Stock Exchange, its revenue for the first six months of this year fell by 26% year-on-year to $64.2 million, due to a 30% drop in the cost of eggs (year-on-year), dry and liquid egg products by 8% and 25%, respectively.
In particular, revenues from eggs fell to $39.86 million from $62.11 million, and pre-tax profit in this segment fell to $4.39 million from $8.66 million, while revenues from egg products decreased slightly to $24.35 million from $26.58 million, although the decline in pre-tax profit was greater – to $9.08 million from $12.22 million.
Also, sales in Ukraine decreased to $31.18 million from $40.76 million, and exports to $33.03 million from $47.93 million.
In January-June this year, Ovostar’s gross profit decreased by 29.3% to $19.1 million, operating profit by 43.8% to $11.3 million, and EBITDA by 41.0% to $12.8 million.
The weakening of the hryvnia also led to the fact that in the first half of this year, Ovostar’s total profit amounted to $6.46 million against $20.59 million in the same period last year.
It is noted that during the year, the total number of livestock increased from 7.3 million to 7.6 million, although the number of laying hens decreased from 6.5 million to 6.2 million, resulting in a 4% decrease in egg production to 706 million.
Against the backdrop of Russia’s full-scale military invasion of Ukraine and the overall unfavorable situation in the country’s economy, the management decided to suspend the investment program, but the company’s investments increased to $6.8 million in the reporting period from $5.2 million in the first half of last year.
“In the first half of 2024, the group started construction of two poultry houses for young poultry with a total budget of about $3.8 million, of which $1.8 million has already been spent as of the reporting date. The planned completion date is April 2025,” the report said.
The group also reported that its net debt jumped from $47.9 million to $72.4 million, but free cash flow increased by about the same amount – from $50.3 million to $74.4 million. In particular, over 12 months in Ukraine, they decreased to $22.7 million from $24.7 million, including the equivalent of $0.4 million in hryvnia from $7.6 million, in Latvia – to $10 million from $21.2 million, while in the UK, an increase to $40.31 million from $0.12 million was recorded.
As reported, Ovostar Union’s net profit for the first quarter of 2024 fell by 22.4% to $6.97 million, while revenue decreased by 24.6% to $35.67 million.
In mid-June 2011, the group’s holding company, Ovostar Union N.V., held an IPO of 25% of its shares on the WSE and raised $33.2 million. However, this year, the majority owners of the agricultural holding, CEO Boris Belikov and member of the Board of Directors Vitaliy Veresenko, together with Fairfax Financial Holding, accumulated 95.45% of the shares and bought out the remaining 4.55%, or 277,066 thousand shares, in a squeeze-out at a price of PLN70 per share (about $17.3 at the then exchange rate).
