Avangard agricultural holding, the largest egg producer in Ukraine, cut monthly production by 50% over the past year due to pressure from law enforcement officers, largely due to the impossibility of organizing the export of its products in such conditions, owner of the agricultural holding Oleh Bakhmatiuk has said.
“We now produce 170 million eggs a month, and we produced about 300 million, and in May – 350 million! Of which 170 million were exported in May, and this month we will send for export, maybe 20 million,” he said is in an interview with the Interfax-Ukraine agency.
Bakhmatiuk explained that the company used credit lines for $ 60-70 million for export, since delivery, for example, to Singapore takes 45 days and the supplier needs to be granted a delay.
“But thanks to the valiant actions of the NABU (the National Anti-corruption Bureau of Ukraine), all credit lines were closed to us, we were forced to almost completely close the export direction,” the Avangard owner said, adding that the coronavirus pandemic complicated logistics by making it longer and 30% more expensive.
According to him, out of seven trading houses – in Hong Kong, Singapore, Malaysia, Iraq, Liberia, Saudi Arabia and Dubai, the opening of which took six years and about $ 25-30 million, Avangard retained only one – in Dubai.
Talking about other reasons for the reduction in production, Bakhmatiuk named a painful rise in the price of raw materials, in particular, fat and oil, bagasse and cereals, common for the entire sector.
“This reputational war has been added to the general problems of the sector. In fact, 12 poultry farms have been closed, now the 13th will be closed,” he said, adding that there are 13 operating factories left.
As the businessman noted, such a reduction in production, taking into account fixed costs, led to an increase in the cost of an egg by about 20 kopecks.
Commenting on the rise in egg prices in Ukraine, he called it forced.
“We go to zero profitability and even with a small minus. Because feed prices are growing faster than the demand and the price of eggs are growing,” the businessman explained.
Net loss of Avangard agroholding, the largest egg producer in Ukraine, was 86.7% less in 2017, reaching $7.5 million, the holding reported on the London Stock Exchange on Thursday. Consolidated revenue fell by 335, to $127.9 million, including revenue from exports of shell eggs and dry egg products fell by 45%, to $36.7 million. Operating loss fell by 74.4%, to $3.8 million, and earnings before interest, taxes, depreciation and amortization (EBITDA) grew almost 7.9-fold, to $11.8 million.
The agroholding said that in October-December 2017, the company saw $13.1 million of net profit compared with $17.8 million of net loss a year ago. Consolidated revenue fell by 45%, to $43.7 million, while operating profit grew 1.77-fold, to $20.8 million and EBITDA – 1.08-fold, to $23.6 million.
Shell egg production fell by 4% in 2017, to 2.399 million, while sales grew by 23%, to 1.869 million. As at December 31, 2017, the total poultry flock amounted to 9.5 million hens, down by 30% year-over-year. Average price of eggs fell by 13% in 2017, to UAH 1.17 per egg (excluding VAT).
The production of dry egg products amounted to 6,368 tonnes, a decline of 48% year-over-year. Sales of dry egg products totaled 3,264 tonnes, down by 64% year-over-year. Exports of dry egg products amounted to 2,561 tonnes, a decline of 69% year-over-year. The average sales price of dry egg products was $4.3 per kg, 23% down year-over-year.
As reported, Ukrlandfarming agricultural holding in 2017 reduced the land bank by 5.8%. Ukraine’s largest producer of eggs Avangard agricultural holding, controlled by Ukrlandfarming, whose shares are traded on the London Stock Exchange, in October 2015 completed the restructuring of eurobonds for $200 million. Previously American Cargill has withdrawn from among the shareholders of Ukrainian-based UkrLandFarming (ULF) agrarian holding, according to a ULF financial report for 2016. Cargill’s subsidiary, Cargill Financial Services International Inc. by the end of 2015, had held 1,668,749 ULF shares, or 5% of the total number. By the end of 2016, the number of shares owned by Avonex Limited had not changed, whereas the package held by Cargill was transferred to Cyprus-based Quickcom Limited’s ownership. The report says that the sole owner of Avonex Limited and Quickcom Limited is Oleh Bakhmatiuk. Cargill acquired a 5% stake in ULF early in 2014 for $200 million. Based on the sum of the deal, the total value of the holding was assessed at $4 billion.
