“Kernel, one of Ukraine’s largest agricultural holdings, posted $682 million in gross profit in fiscal year (FY) 2024, up 7% from FY 2023.
According to the annual report published on the company’s website, Kernel earned $3.581 billion in revenue last fiscal year, up 4% year-on-year.
“This growth was driven by increased sales volumes across all key products – grain, sunflower oil and sunflower meal – due to the reopening of exports to Ukrainian Black Sea ports in mid-October 2023. This growth was partially offset by lower realized prices. Cargo transportation and other services reached a record high of $405 million, accounting for 11% of total revenue. Export sales accounted for 94% of total revenue,” the report says.
At the same time, Kernel recognized a loss of $10 million from changes in the fair value of biological assets and agricultural products in FY2024, compared to a loss of $115 million in FY2023.
The cost of sales in FY2024 increased by 7% year-on-year to $2.889 billion, driven by a 7% year-on-year increase in the cost of goods for resale and raw materials used, as well as a 7% increase in shipping and handling costs, the company explained.
At the same time, Kernel estimated losses from property damage and business interruption due to Russia’s war against Ukraine at $71 million, up 33% year-on-year, and reported that it received a one-time insurance payment of $34 million.
In FY2024, the agricultural holding received $9 million in profit from securities transactions (including Avere trading), inventory income, foreign currency gains, and income from contract termination.
In FY2024, Kernel’s other operating expenses amounted to $23 million, down 34% year-on-year. This included $17 million of shipping and other penalties (due to long waiting times for loading and unloading vessels in ports) and a $5 million loss from the Group’s securities and derivatives operations.
The agroholding increased salaries and related expenses by 24%, or $81 million. As a result, general and administrative expenses in FY2024 increased by 4% year-on-year to $213 million, mainly due to higher salaries and related expenses.
In addition, Kernel recognized net impairment losses on financial assets of $11 million, which reflects the provisions made for receivables and loans to third parties.
The agroholding also recorded a loss of $229 million in FY2024 due to impairment of property, plant and equipment ($117 million), impairment of goodwill related to two oilseed processing plants previously acquired by Kernel ($58 million), and impairment of intangible assets related to the port transshipment business ($24 million).
In addition, the agricultural holding mentioned the impairment of prepayments to suppliers and other current assets ($6 million), the write-off of assets destroyed by Russian shelling ($14 million), etc.
As a result, Kernel’s operating profit in FY2024 decreased by 37% compared to the same period in FY2023 to $276 million.
Financial expenses in FY2024 decreased by 22% year-on-year to $119 million, driven by a significant repayment of the group’s bank loans in December 2023 and a decrease in lease payments following the sale of a part of the agricultural business in March 2023.
Financial income in FY2024 increased by 62% year-on-year to $50 million, mainly due to interest accrued on financial assets held for cash management as additional liquidity balances were allocated to interest-bearing instruments. This also included a non-cash gain of $6 million on the repayment of certain credit facilities at a discount.
As a result, net financial expenses decreased by 43% year-on-year to $69 million.
Net foreign exchange gain amounted to $33 million, mainly due to the devaluation of the Ukrainian hryvnia against the US dollar during the reporting period and the corresponding revaluation of intra-group balances.
Other expenses, net, increased 2.5 times year-on-year to $29 million. Among them, the agricultural holding mentioned expenses for charitable and social projects of $25 million, fines and penalties of $6 million, as well as $2 million of profit from the sale of subsidiaries, as the Group completed the sale of three floor-type granaries in FY2024.
The Group reported operating profit of $604 million before working capital changes, down 20% year-on-year. This was 59% higher than EBITDA for the period, reflecting the impact of significant non-cash items recognized during the year.
After accounting for foreign currency translation differences, total comprehensive income attributable to shareholders in FY2024 amounted to $63 million, up 7% year-on-year.
The Board of Directors has recommended to the General Meeting of Shareholders to declare dividends of zero for the year ended June 30, 2024.
Before the war, Kernel Agro Holding was the world’s leading producer of sunflower oil (about 7% of global production) and its exports (about 12%). It is one of the largest producers and sellers of bottled oil in Ukraine. In addition, it is engaged in the cultivation and sale of agricultural products.
