The European Bank for Reconstruction and Development (EBRD) could provide a senior secured long-term loan of up to $20 million to finance working capital of Astarta agricultural holding. According to a report on the bank’s website, the decision could be made on June 18.
The project will support the company in development and implementation of cooperation with local universities and schools, contributing to improved access to training and employment opportunities for young people.
In addition, the project is expected to contribute to significant efficiency and productivity gains through introduction of modern IT solutions and farming techniques as well as to support development of stronger backward linkages to local suppliers.
The total cost of the project is $242 million.
As reported, the EBRD in October 2017 provided a $25 million loan for seven years to build and buy sugar and grain storage facilities.
Astarta is a vertically integrated agro-industrial holding operating in Poltava, Vinnytsia, Khmelnytsky, Ternopil, Zhytomyr, Chernihiv, Cherkasy and Kharkiv regions.
Astarta agroindustrial holding, the largest sugar producer in Ukraine, has completed sowing of spring crops on around 170,000 ha.
The holding said in a press release that sugar beet was sowed on 41,000 ha, sunflower on 41,000 ha, corn on 67,000 ha, soybean on 20,000 ha, and the rest are under other crops (barley, oats, buckwheat and other).
“The structure of crop rotation reflects the existing market trends. Thus the reduction of sugar beet plantings will allow the company to organize harvesting and processing of beets in the optimal terms, focusing on the cost-efficiency and quality of sugar. In addition to own beet production Astarta will traditionally cooperate with farmers who supply its factories with sugar beets,” the company said.
The increase in areas under corn could also bring a good financial result against the backdrop of the continuing trend of price recovery for this crop.
This spring sowing campaign was conducted in a record short terms.
“All technological operations were carried out in the optimal time, which along with appropriate level of soil moisture gave a quick start to plants growing. The company is progressing in improving the efficiency of field works: we are concentrating each culture sowing on the large plots, using GPS tracking not only for tractors, but for all trailed aggregates,” the company said.
As of the end of May, winter and spring crops are mostly in good and excellent condition. The weather in the Eastern and Western production units contributes to their development.
The International Finance Corporation (IFC) from the World Bank group has signed loan agreements on the provision of financing to the largest sugar producer in Ukraine Astarta for the amount of $30 million and the large pork producer Nyva Pereyaslavschyny for $12.5 million.
“Agribusiness is a priority for IFC globally, and Ukraine is very important to our strategy in the sector,’ Stephanie von Friedeburg, IFC’s chief operating officer, said during a signing ceremony in Kyiv.
According to the press release, IFC’s financing will support a two-year investment program aimed at improving the company’s resource efficiency and competitiveness by modernizing its sugar plants. This would help reduce the use of gas, electricity, and water. The program also aims to help Astarta—which grows and trades grain and oilseed—purchase modern and efficient farm machinery and construct of new storage facilities.
IFC is providing long-term debt financing to support Nyva’s investment program, which includes constructing a new meat-processing facility that will become one of the country’s first to comply with European Union standards for food safety and animal welfare. The company will also build a new pig farm and a rendering plant capable of recycling up to 50 tonnes of waste every day, helping to reduce its environmental footprint.
This is IFC’s second investment in Nyva.
Pork production in Ukraine remains inefficient and highly fragmented, with many smaller producers lacking sufficient quality controls, IFC said.
Astarta agroindustrial holding, the largest sugar producer in Ukraine, in January-March 2018 saw an 86% fall in net profit year-over-year, to UAH 124.3 million, the company has said on the website of the Warsaw Stock Exchange (WSE). According to the press release, revenue over the period fell by 28.7%, to UAH 3.04 billion, gross profit – 58.3%, to UAH 623.032 million and operating profit – 86%, to UAH 141.36 million.
There are several reasons for this: markets cyclicality, macroeconomic factors, as well as a high comparison base. “Our view is that results should be regarded in a long-term context, so as not to distract from the bigger picture,” the company said.
In euros net profit fell by 88%, to EUR 3.7 million and revenue fell by 38.8%, to EUR 90.59 million.
Earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 70%, to EUR 13.47 million as a result of significant contraction of the global and local sugar prices as well as bad weather conditions in the Poltava region contributed to a higher cost in sugar and farming.
At the same time, when one takes a longer-term view, there are several reassuring thoughts. The group is currently moving through the bottom part of the commodities cycle with low debt, a strong balance sheet, constantly increasing operational efficiency, and a healthy combination of local sales and export.
“There were several similar periods in Astarta’s 25-year history, when the challenges made our company stronger and provided for new growth opportunities,” the company said. With strong support from our financial partners – development and international banks, the company continue its investment program to expand storage infrastructure, further streamline farming operations, and become closer to our end-customers.
Agro-industrial holding Astarta, Ukraine’s largest sugar producer, wants to keep EUR 61.84 million in net profit for the financial year 2017 undistributed. This decision is on the agenda of a meeting of the holding’s shareholders scheduled for May 25.
In addition, the shareholders will consider the re-appointment of Viktor Ivanchyk, Viktor Hladky and Marc Van Campen as board members, along with the appointment of Gilles Mettetal as non-executive director and resignation of Vladyslav Bartoshevsky as non-executive director and deputy chairman of the board of directors.
Another issue on the agenda is the appointment of Zeljko Erceg as Chief Operating Officer of Astarta Kyiv LLC. He will temporarily head the company in case the entire board is temporarily unable to perform duties.
In addition, the shareholders may decide on the prolongation of the buyback program for another 18 months (from the date of the shareholders’ meeting). The company can buy out no more than 2.5 million shares at a price not higher than PLN125 per share.
The agenda also includes the issue of authorizing the board of directors to organize the issue of shares to the amount of up to 10% of current issued and paid-in share capital, as well as the restriction or cancellation of any existing pre-emption rights in shares. All actions are carried out within one year, starting from the date of the annual meeting of shareholders whose permission cannot be withdrawn.
Astarta agroindustrial holding, the largest sugar producer in Ukraine, has started working in the fields and applied fertilizers to 40% of fields with winter crops.
The holding said in a press release that wheat, sugar beets, corn and soybeans remain the main crops in crop rotation.
In general, the company has around 54,000 ha with winter crops. The crops are in a good state.
“Areas planted with sugar beet will be at the level of last year, areas with corn and sunflower would be expanded,” the press service said.
The company also plans to stir up operations of subsidiary Astarta-Selection in 2018. The company’s core business is production of wheat and soybeans for seeds, field research, seed and soil laboratories.
In the course of preparation for the upcoming season, scheduled repairs of equipment and premises, step-by-step execution of investment projects are being carried out at the sugar refineries of Astarta. Large investment in this segment is aimed at building a new warehouse for bulk storage of sugar (Narkevychi sugar factory), creating a system of water treatment plants (between the Holbyne sugar refinery, the bioenergy complex and the Holbyne soybean processing plant) and installing new pulp presses.
Astarta is a vertically integrated agro-industrial holding operating in Poltava, Vinnytsia, Khmelnytsky, Ternopil, Zhytomyr, Chernihiv, Cherkasy and Kharkiv regions.
