Kernel, one of the largest Ukrainian agrarian groups, in the first quarter of 2021 fiscal year (FY), which began in July 2020, reduced sales of sunflower oil by 2% compared to the same period last FY, to 296,240 tonnes.
According to a report on the website of the Warsaw Stock Exchange on Monday, bottled sunflower oil sales in the specified period constituted 11.5% of total sales (in the same period last FY – 8.4%).
In July-September of this year, the holding’s oil extraction plants processed 662,610 tonnes of oilseeds, which is 5% more than in the first quarter of FY2020. The company said that this is – the largest ever volume in the first quarter of the financial year.
According to the report, the volume of grain exports from Ukraine in the first quarter of FY2021 increased by 31%, to 2.13 million tonnes, of which 1.9 million tonnes originated from external suppliers, and the remaining volumes being produced by company’s farming division.
Export terminals throughput volume in Ukraine increased by 56%, to 1.87 million tonnes. As explained in the company, this was driven by incremental transshipment volume on Company’s new grain export terminal in the port of Chornomorsk. The company’s silo in-take volume decreased by 36%, to 1.25 million tonnes, reflecting a crop size reduction in company’s farming business and a delayed harvesting campaign this season.
As of October 25, 2019, Kernel has threshed 43.7% corn, 98% sunflower and 100% wheat.
The agricultural holding intends to harvest corn from 254,800 hectares (10% more than a year earlier), sunflower from 148,200 hectares (9% more), wheat from 72,300 hectares (26% less), and other crops from 23,100 hectares (52% less). The company has a total of 498,400 tonnes of crop acreage, which is 3% less than in FY2020, the agricultural holding said.
Ukrainian agricultural holding Kernel, which announced about a buyout of 2022 eurobonds for up to $350 million on October 5, received applications for a total sum of $285.89 million by the term of early deadline and decided to satisfy all of them, according to the company’s report on the exchange on Tuesday, October 20.
These debut eurobonds of the agricultural holding were issued in January 2017 for five years for $500 million at 8.875% with a coupon of 8.75%. The purchase price was set at 105.625%.
At the same time, Kernel announced issuing eurobonds in the amount of approximately $300-350 million for a period of five or seven years. The organizers of the issue are JPMorgan, Credit Agricole и Natixis.
“The purpose of the tender offer is to proactively manage and lengthen the structure of the group’s debt by maturity by refinancing part of the bonds with new bonds with a longer maturity,” the report says.
The company confirmed that the early settlement is October 29. The deadline for accepting applications for exchange is November 2, however, after the early deadline, the settlement price is 102.625%. The final settlement date is November 5.
The redeemable Kernel eurobonds at the end of the day on October 19 were quoted at the rate of 105.544% of the face value, which corresponded to profitability of about 4.229%.
Kernel, one of the largest Ukrainian agricultural groups, in the third quarter of FY2020 (started in July 2019) cut sunflower oil sales by 2% year-over-year, to 380,900 tonnes.
According to an operations update posted on the website of the company, the share of bottled oil of total sales in January-March 2020 was 10% (39,000 tonnes).
Oilseeds crushing in Q3 FY2020 grew by 4%, to 940,650 tonnes, running crushing plants at full capacity.
The holding said that grain exports from Ukraine in January-March 2020 grew by 41%, to 2.15 million, including 35% of grain produced by company’s farming division, and the remaining was originated from external suppliers.
Export terminal throughput volumes in Ukraine reached 1.9 million tonnes in the reporting period, up 66% year-over-year, on the back of strong grain export volumes from Ukraine and increased contribution from new TransGrainTerminal. Grain and oilseeds received in inland silos fell by 65%, to 124,540 tonnes.
Kernel cut sunflower sails by 12% year-over-year, to 1 million tonnes. Sunflower crushing grew by 115, to 2.52 million tonnes. The company is progressing on the guidance to process 3.3 million tonnes of sunflower seeds for the whole FY2020.
In 9M of FY2020 grain exports from Ukraine grew by 30%, to 6 million tonnes.
According to the document, export terminal throughput volumes in Ukraine in 9M of FY2020 grew by 41%, to 4.82 million tonnes. Grain and oilseeds received in inland silos fell by 2%, to 4.12 million tonnes.
One of Ukrainian banks and the large Ukrainian agricultural holding Kernel signed a first non-deliverable forward (NDF) contract in the history of Ukraine last week, the National Bank of Ukraine (NBU) has said.
“This is the first transaction to hedge currency risks of this type in the Ukrainian market. Earlier, deliverable forward contracts were also concluded in the market, but their share is still insignificant and has great potential for growth,” the regulator said in a statement last week.
NBU Deputy Governor Oleh Churiy said that in the world on the foreign exchange market spot transactions, that is, those that are actually settled on the same day, make up no more than a third of the total foreign exchange market.
“The rest are transactions using hedging instruments: forwards, futures, swaps. Unfortunately, in Ukraine it is the opposite: spot transactions dominate, and cases of hedging currency risks by the business are still isolated,” Churiy said.
According to him, with a floating exchange rate, business owners and financial directors should pay attention to hedging tools that are already available in Ukraine. These are, in particular, deliverable and non-deliverable forward contracts, which can be concluded with banks for export-import operations or loans from nonresidents.
“For four years now, Ukraine has been living in a flexible exchange rate environment that avoids the accumulation of imbalances in the economy, but also requires prudent planning for the business,” the NBU deputy governor said.
Kernel, a large Ukrainian agricultural holding, saw $59.61 million in net profit in the first quarter of FY2020 (July 2019 – June 2020), which is 24% less than in the first quarter of FY2019 over the IFRS 16 impact.
According to a report of Kernel Holding S.A. (Luxembourg) on Wednesday, revenue reduced 26% year-over-year to $845.84 million, stemming from lower trading volumes.
However, earnings before interest, taxes, depreciation and amortization (EBITDA) added 6% year-over-year to $106.5 million driven by Oilseed Processing segment EBITDA small growth.
In particular, Oilseed Processing segment EBITDA reached $22 million (up 38% year-over-year). Infrastructure and Trading segment generated $35 million EBITDA, 8% decline year-over-year. Unallocated corporate expenses in the reporting period amounted to $9 million, up 40% year-over-year.
The company said that the general outlook for the segment’s performance in FY2020 remains positive. Kernel expects Infrastructure and Trading business to be the largest contributor to group’s EBITDA in FY2020 owing to: commissioning of new grain export terminal scheduled for January 2020; growing grain export volumes; and strong contribution of grain railcars business.
Kernel said that at the date of this report, we completed this year harvesting campaign on 513,000 hectares, reaching record ever net yields for wheat (5.9 tonnes per hectare, up 16% year-over-year) and sunflower (3.5 tonnes per hectare, up 11% year-over-year), while facing normalization of corn yields to 8.6 tonnes per hectare (down 13% year-over-year).
“For the whole FY2020, we expect over $100 million farming EBITDA (net of IAS 41 and IFRS 16 effects), weakened by corn yield decline, lower year-over-year grain prices and growing production costs enhanced by local currency appreciation,” the group said.
Kernel’s gross profit in Q1 FY2020 fell by 9.9%, to $85.85 million, and operating profit – by 0.5%, to $82.09 million.
Net debt as of September 30, 2019 reached $1.144 billion, up 65% from June 30, 2019 level, reflecting short-term borrowings increase to finance working capital needs at the beginning of the season as well as $307 million new lease liabilities added to the balance sheet after implementation of IFRS 16.
Readily marketable inventories (RMI) increased by $275 million over Q1 FY2020, to $568 million, driven by procurement of grain and sunflower seeds.
Consequently, net debt adjusted for RMI increased to $576 million on September 30, 2019 from $400 million on June 30, 2019, with growth solely arising from IFRS 16 introduction. As a result, Kernel leverage as of September 30, 2019 increased to 3.3x Net-debt-to-EBITDA and 3.7x EBITDA-to-interest (post IFRS 16).
Kernel, one of the largest Ukrainian agricultural groups, has issued $300 million aggregate principal amount of 6.5% notes (eurobonds) due October 17, 2024.
Kernel said on the website of the Warsaw Stock Exchange (WSE), the issue price was 99.475%.
The notes are rated BB- by Fitch, and B by S&P, two notches above and in line with Ukrainian sovereign respectively.
In January 2017, Kernel placed eurobonds worth $500 million. The maturity date of Kernel’s debut eurobonds was January 31, 2022, and the coupon rate was set at 8.75% per annum.
Kernel is the world’s largest producer and exporter of sunflower oil, the leading producer and supplier of agricultural products from the Black Sea region to world markets.
