Business news from Ukraine

Kernel reduces sunflower and rapeseed processing by 5%

30 October , 2023  

“Kernel, one of the largest Ukrainian agro-industrial groups, processed 610 thousand tons of sunflower and rapeseed at its oil extraction plants in the first quarter of the 2023/24 fiscal year (FY, July 2023 – June 2024), down 5% year-on-year.

“Due to the seasonal shortage of sunflower seeds at the end of the processing season (the new harvest will be in September-October 2023), the Group switched to rapeseed processing at two of its plants, processing 112 thousand tons for the three months ended September 30, 2023,” the company said in its financial report posted on its website over the weekend.

According to the report, the volume of edible oil sales in the first quarter of 2023/24 FY increased by 16% compared to the previous quarter and amounted to 369 thsd tonnes, including 20 thsd tonnes of bottled sunflower oil and 19 thsd tonnes of rapeseed oil.

In addition, the increase in yields and the increase in acreage under wheat, sunflower and soybeans harvested by Kernel’s agricultural enterprises, according to the data for the 1st quarter of 2023/24 fiscal year, led to an increase in the volumes received for storage at the group’s elevators to 1.208 million tons, which is 2.3 times more than a year earlier.

The agroholding noted that due to the termination of the Black Sea Grain Initiative on July 18, 2023, the throughput capacity of Kernel’s export terminals in Ukraine decreased significantly to 162 thsd tonnes in the first quarter of 2023/24, which is 83% less than in the previous quarter. Half of the exported agri-goods were shipped through Kernel’s infrastructure facilities in the port of Reni on the Danube.

Ukraine exported 203 thsd tonnes of grain in the first quarter of 2023/24, down 68% quarter-on-quarter. Most of the grain was exported via Ukrainian ports on the Danube and by rail to the Romanian port of Constanta, as Kernel’s usual export routes – Ukrainian Black Sea ports – were unavailable for export operations due to Russia’s unilateral termination of the Black Sea Grain Initiative in July 2023, the financial report says.

According to the agroholding, alternative export channels for Ukrainian agricultural products lead to high logistics costs, which, against the backdrop of low global grain prices, lead to a reduction in exports.

In this regard, Kernel has made significant changes to the structure of crops grown to minimize the area under the most energy-intensive and logistically complex crops (grains and corn) in favor of less energy-intensive soybeans and wheat.

As of September 30, the agronomic division completed the harvest of wheat, sunflower and soybeans on 61 thou hectares, 119.8 thou hectares and 65 thou hectares, respectively. The yields of all crops were better than expected due to favorable weather conditions and amounted to 6.7 t/ha of wheat, 2.9 t/ha of sunflower, and 2.9 t/ha of soybeans.

Corn harvesting from 84.4 thou hectares is still ongoing. Approximately half of the area has not yet been harvested. As a result of the harvesting campaign, Kernel expects to achieve a corn yield of 9.5 tons per hectare.

Prior to the war, Kernel was the world’s largest producer of sunflower oil (about 7% of global production) and a major exporter (about 12%). It is 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 previous year it ended 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.

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