“Kernel, one of Ukraine’s largest agribusiness groups, earned $208.71 million in net income in the second quarter of fiscal year 2023 (FY, July-September 2022), down just 2.1% from the same period in the previous FY.
According to a financial report on the company’s Web site Friday evening, the agriholding’s revenue for the period fell 34.2 percent to $1 billion 235.28 million.
Gross profit was down 14.9 percent to $294.06 million, operating income was down 2.3 percent to $244.36 million and EBITDA was down 5.1 percent to $277.15 million.
These numbers are significantly better than the first quarter of this fiscal year.
The company attributed the 34% year-on-year decline in revenues to lower exports of grain, sunflower oil and meal.
The report notes that the net change in fair value of biological assets did not have a significant impact on the group’s results in the second quarter, with a profit of $0.3 million versus a profit of $27 million in the same period last year.
According to the document, shipping and handling costs accounted for 23% of cost of sales in October-December 2022, up 120% quarter-on-quarter and 64% quarter-on-quarter, reflecting sharply higher logistics costs in exporting goods from Ukraine. This caused a 15% decrease in gross profit.
“Kernel also recognized a $5 million gain from the reversal of previously recognized asset impairments, primarily related to inventories located in territories previously occupied by Russia, as the company was able to access and use such inventories in its operations.
General and administrative expenses in the second quarter of fiscal 2023 were $59 million, an increase of 33% over the first quarter of fiscal 2023, reflecting higher payroll-related accruals.
Regarding EBITDA, Kernel clarified that in the Oilseeds Processing segment, it increased 10% year-over-year to $66 million, mainly due to the second consecutive quarter of strong profitability for those players who were able to organize the logistics of sunflower oil exports from Ukraine.
“Despite improved profitability year-over-year in the reporting period for all businesses in the Infrastructure & Trading segment, a more than two-fold decline in export volumes led to a 46% year-over-year decline in segment EBITDA to $62 million,” the report said.
According to it, the Agriculture segment recorded a solid EBITDA of $204 million, up 45% from last year. This growth is largely due to the devaluation of the hryvnia, the document said.
Kernel added that its net profit from exchange rate differences in the reporting period amounted to $8 mln.
Kernel’s net debt, according to the report, decreased during the quarter by 30% – to $1.048 billion, and the ratio of net debt to EBITDA decreased from 13.5 to 11, but it is still much higher than a year ago, which was 1.9.
Overall, in the first half of 2023FG Kernel’s net profit decreased by 12.6% to $370.31 million compared to the same period last year, while revenues fell by 41.3% to $1 billion 889.78 million.
Gross profit was down 30.8% to $467.41 million, operating income was down 21.8% to $386.83 million and EBITDA was down 21.9% to $445.52 million.
As reported, Kernel ended FY 2022 with a net loss of $41 million versus $506 million in net income in the previous fiscal year on a 5% decline in revenue to $5.332 billion.
