Geographical structure of Ukraine’s foreign trade (exports) in Jan-Sept 2024, thousand USD
Open4Business.com.ua
“Kernel, one of Ukraine’s largest agricultural holdings, posted a net profit of $121 million in the first quarter of fiscal year (FY) 2025 (July-September 2024), compared to a net loss of $31 million in the same period of FY 2024.
“This indicates a strong dependence of the group’s revenues on the availability of the Black Sea for export operations,” the company said in a quarterly report published on its website on Friday.
According to the report, Kernel’s consolidated revenue in Q1 FY2025 reached $798 million, up 46% year-on-year, amid a low comparative base due to the lack of stable grain export operations in July-September 2023.
At the same time, it is specified that compared to the previous quarter, in July-September 2024, revenue decreased by 19% due to a seasonal decline in sales of edible oils and grain.
“Due to the increase in global prices for grains and oilseeds, the Group recognized a net gain on changes in the fair value of biological assets of $42 million compared to a loss of $10 million recognized in Q1 FY2024,” the report also says.
It is also noted that Kernel’s cost of sales decreased by 18% quarter-on-quarter to $675 million, in particular, shipping and handling costs fell by 38% due to lower sales volumes and lower freight costs and accounted for 15% of the total cost of sales.
“As a result, gross profit for July-September 2024 decreased by 20% year-on-year to $164 million, which is 3.2 times higher than the previous year’s result of $52 million,” the document says.
According to the report, Kernel’s EBITDA in the first quarter of 2025 amounted to $169 million compared to $19 million in the first quarter of 2024.
It is specified that the oilseeds processing segment provided EBITDA of $37 million, which is 37% less than in the previous year, and this decrease was due to both a decrease in edible oil sales and a decrease in profitability.
In the Infrastructure and Trading segment, EBITDA amounted to $53 million, up 9 times year-on-year, mainly due to the inaccessibility of the Black Sea for export operations from Ukraine in the same period last year. This year’s strong performance was driven by profitable grain harvesting and transshipment operations in Ukraine and the availability of deepwater ports, which ensured stable export operations.
The Agriculture segment reported a strong EBITDA of $84 million, a sharp turnaround from a loss of $23 million in 1Q2024, thanks to $42 million from the revaluation of biological assets, supported by the sale of 521 thousand tons of grains and oilseeds in July-September 2024.
“Operating profit before changes in working capital in July-September 2024 increased 2.8 times compared to the same period last year and reached $148 million, reflecting an improvement in the EBITDA structure due to the opening of deepwater ports for export operations,” the document states.
At the same time, changes in working capital resulted in a cash outflow of $56 million in the reporting period, which was mainly due to the seasonal accumulation of inventories amid the ongoing harvesting campaign in Ukraine.
Net cash used in investing activities amounted to USD 20 million, reflecting the purchase of property, plant, and equipment. Following the completion of major investment projects in the previous financial year, the Group shifted its focus to modernizing agricultural machinery and other maintenance activities.
According to the report, net cash provided by financing activities for the three months ended September 30, 2024 amounted to $20 million, including $114 million in proceeds from new borrowings, $83 million in repayments of borrowings, and $11 million in repayments of agricultural land lease obligations.
Kernel’s debt obligations increased by 4% in the first quarter of FY2025 to $1.129 billion, reflecting the use of previously signed credit lines from European and Ukrainian banks to finance working capital, but the company repaid $300 million of Eurobonds in October, and its net debt decreased by 7% to $261 million at the end of September.
“In the first quarter of FY2025, the group’s leverage improved, with net debt to EBITDA falling to 0.5x and interest coverage ratio rising to 10.7x EBITDA before 12-month interest,” the document states.
It is also specified that inventories increased by 76% in the first quarter of FY2025 to $435 million, reflecting the seasonal accumulation of sunflower seeds and grain due to the long harvesting campaign in Ukraine. Inventories included 988 thousand tons of grains (mainly corn, wheat and soybeans), 94 thousand tons of edible oil, 49 thousand tons of sunflower meal and 340 thousand tons of sunflower seeds.
In addition, in October 2024, the company raised a $150 million pre-export credit line from a syndicate of international banks to support export operations and meet working capital needs in the current fiscal year.
Kernel is the world’s largest exporter of sunflower oil and one of the largest producers and sellers of bottled oil in Ukraine. It is also engaged in the cultivation and sale of agricultural products.
Kernel’s net profit for FY2023 amounted to $299 million, while the company ended the previous year with a net loss of $41 million. The agricultural holding’s revenue for FY2023 decreased by 35% to $3.455 billion, but EBITDA increased 2.5 times to $544 million.
Ukrainian companies increased exports of ferrous scrap by 62.4% year-on-year in January-November this year, up to 261,578 thousand tons from 161,025 thousand tons.
According to the statistics released by the State Customs Service on Monday, 34.608 thousand tons of scrap were exported in November, 24.549 thousand tons in October, 24.767 thousand tons in September, and 28.767 thousand tons in August. tons, in August – 28,425 thousand tons, in July – 24,702 thousand tons, in June – 22,161 thousand tons, in May – 14,952 thousand tons, in April – 26,153 thousand tons, in March – 20,907 thousand tons, in February – 23,194 thousand tons, in January – 17,160 thousand tons.
In monetary terms, scrap exports increased by 76.8% to $82.056 million from $46.406 million.
In January-November, Ukraine exported scrap mainly to Poland (82.56%), Greece (12.58%) and Germany (3.49%).
For the eleven months of the year, the country imported 100 tons of scrap metal for $108 thousand, while in January-November 2023, 987 tons were imported for $383 thousand. This year’s imports were carried out mainly from Turkey (65.74% in monetary terms), the British Virgin Islands (16.67%) and Panama (6.48%).
As reported, in 2023, Ukraine’s scrap collecting enterprise increased scrap exports from the country by 3.4 times compared to the previous year – up to 182,485 thousand tons from 53,557 thousand tons. In monetary terms, exports increased 2.74 times to $52.723 million from $19.271 million.
Earlier, Ukrmetallurgprom President Oleksandr Kalenkov stated in a column on the Interfax-Ukraine website that scrap is exported through the European Union, which has a preferential export duty of EUR3 per ton, and from there the raw materials are redirected to real customers. He noted that exporting raw materials directly to customers would cost EUR180 in export duties, and the Ukrainian budget has already lost UAH 350 million.
The head of Ukrmetallurgprom called for a temporary ban on the export of ferrous scrap to provide steelmakers with strategically important raw materials in the face of the ongoing war. He also clarified that a ton of scrap processed into steel brings in 10 times more to the budget than the EU export duty, which is about $300 per ton.
In 2022, Ukraine reduced exports of ferrous scrap by 11.5 times compared to the previous year, to 53,557 thousand tons, and in monetary terms, it decreased by 12.4 times, to $19.271 million.
Demand for Ukrainian wheat remains high, in particular from Spain, where last week agreements were concluded for the supply of feed wheat at a price of $237-238 per ton with delivery in January, according to the analytical cooperative “Pusk”, established within the framework of the All-Ukrainian Agrarian Rada.
Analysts noted that the world markets are facing competition from Russian wheat, which dominates the markets of Algeria, Tunisia and the Middle East due to its aggressive pricing policy. However, the situation, according to experts, may change in 2025.
“It is expected that from February to June 2025, the Russian Federation will be able to export only 11 million tons due to the introduction of an export quota. This is significantly less than in the previous season, when the quota was 28-29 million tons. An additional factor of influence is the unsatisfactory condition of 30% of winter crops in Russia. We can expect a gradual increase in wheat prices already in December-January, which may amount to $20-25 per ton,” – predicted in ‘Pusk’.
Analysts added that on the domestic market of Ukraine, wheat of 2-3 class remains the main commodity for processors, while exporters are offered feed grain.
Canadian mining company Black Iron Inc. with assets in Ukraine has started the active process of obtaining permits for iron ore mining within the framework of the implementation of the new Shimanovskiy iron ore project in Kryvyi Rih. According to the materials available to Interfax-Ukraine, a subsidiary of Shimanovskoye Steel LLC has applied for a permit for open-pit iron ore mining in the northern part of the Shimanovskoye open pit.
It is planned that the total volume of overburden ore will be 5.13 million cubic meters, including 1.31 million cubic meters of ore, and the open pit will be 660 meters by 390 meters and 80 meters deep. It is also expected to produce 4.5 million tons of ore per year during year-round operation.
As reported, Black Iron Inc. continues to advance the Shimanovskoye iron ore project, having prioritized it by concluding an investment agreement with the country’s government. The main issue remains the obtaining of a land plot under the jurisdiction of the Ministry of Defense. Discussions with the Ministry of Defense have led to an agreement on the preliminary amount of money that Black Iron will have to pay as compensation for obtaining this land for its use.
The Company has also stated that it is considering new potential projects.
In October 2010, Black Iron acquired the Cypriot subsidiary of Geo-Alliance Ore East Limited, along with licenses, from the EastOne investment group of Ukrainian businessman Victor Pinchuk for $13 million, then renaming it BKI Cyprus. Its main assets are 99% in Shimanovskoye Steel LLC and Zelenovskoye Steel LLC (both in Dnipro).
In July 2013, after a number of problems with the implementation of the project, Black Iron Inc. announced an agreement with Ukraine’s largest mining and metallurgical group Metinvest to develop its iron ore assets. Metinvest B.V. paid Black Iron Inc.$20 million and acquired a 49% stake in BKI Cyprus. However, Metinvest later withdrew from the project.
The Shimanovskoye iron ore deposit is surrounded by five other operating mining operations, including ArcelorMittal’s iron ore complex. Existing infrastructure, including access to power, rail and port facilities, Black Iron believes will allow the project to ramp up to production quickly.
According to the presentation dated May 2021, the expected capital investment for the launch of the first phase is estimated at $452 million, the second – $364 million. The project envisaged the construction of a plant for the production of premium iron ore raw materials with an iron content of over 68% with a capacity of 4 million tons per year in the first phase and 8 million tons per year in the second.
LLC Shimanovskoe Steel was registered in June 2007. Black Iron (Cyprus) owns 100% of Shimanovskoye Steel. The authorized capital is UAH 193 mln 677,830 th.
AllSeeds Group, one of Ukraine’s largest producers of sunflower oil and meal, has stopped buying raw materials for processing and finished products for export due to delays of ships in ports during the implementation of a new system of export security, the head of the group Vyacheslav Petrishche said on Facebook.
He recalled that on the initiative of the Verkhovna Rada Committee on Finance, Tax and Customs Policy from December 1 began to operate the export security regime to operations for the export of certain types of agro-commodities, which provides a new procedure for customs clearance of export cargoes.
“Well a good thing it seems. Allegedly to combat the shadow market and return currency to the country. I am personally unequivocally in favor of it. I have always been, am and will be against the shadow market. But can it be done not to the delight of the enemy during the bombings, but for the good of the motherland? (…) If you introduce a new procedure, can it be tested first? Will it work at all?” – wrote Petrishche.
According to his information, the authorities issued permits for loading agro-products with all necessary checks on November 29 (before the introduction of the new system – IF-U). Large ships entered Odessa seaports, carried out loading for several days and waited a long time for registration.
“Did you put all this goodness under the berths on purpose for inspection? So that the enemy could take better aim???? (…) during the war I would call it sabotage, you can’t think of anything else. (…) Well, let these boats go (the law has no retroactive effect) and do not launch new ones (and they are already waiting) until exporters submit export documents properly executed according to the new procedure”, – said the head of the AllSeeds group of companies.
Petrische drew attention to the growing losses of companies due to ship demurrage and pointed to safety problems during the downtime in the transition period when implementing the new agro-export system.
“Our company has stopped buying raw materials for processing and finished products for export. It is better to let people go home and sit with their money than to take the risk that if you are not the enemy, you will be “sheltered” by your own people. I recommend it to everyone,” Petrishche emphasized.
He reminded the head of the parliamentary finance committee, Daniil Hetmantsev, that the road to hell is paved with good intentions, and recommended him to “ruin the whole economy” on his own.
“God grant him health, and God grant the country to survive it! (…) It’s a shame for the State,” summarized the head of the AllSeeds group of companies.
Allseeds Group is one of the five largest Ukrainian producers and exporters of vegetable oils and meal. It owns an oilseed processing plant with a capacity of 2200 MT per day of sunflower seeds (or 1500 MT per day of rapeseed or 1 day of soybeans), which is located in the port “Yuzhny” (Odessa region).
Allseeds also provides transshipment services for vegetable oils and oilseed meal at its terminals in Yuzhny. The capacity for simultaneous storage of vegetable oils is more than 100 thousand tons, and of oil meal – 30 thousand tons.
