“In 2023, Kernel, one of the largest Ukrainian agro-industrial groups, strengthened its position as a port operator by acquiring a tanker, two bulk carriers and terminals for transshipment of sunflower oil in Odesa’s Pivdennyi and Chornomorsk ports and on the Danube River, said Yevhen Osypov, CEO of the agricultural holding.
“The agricultural holding has long been a port operator. We have several terminals through which we export. Over the past year, we have invested and purchased terminals for transshipment of sunflower oil. We did not have self-propelled terminals before. We used the services of partners,” he said at the Business Breakfast with Forbes Ukraine on Wednesday.
Osipov noted that the bulk of the agricultural holding’s terminals were concentrated in Mykolaiv. After losing Mykolaiv ports to the full-scale war, Kernel had to invest in new supply chains for sunflower oil to the global market and acquired terminals in Pivdennyi and Chornomorsk ports and on the Danube River to ensure exports. The agricultural holding’s SEO called the acquisition of vessels one of the elements of Kernel’s sustainable development.
“At some stage, we did not understand whether the corridor would work or not (the Black Sea Grain Initiative – IF-U), and the volumes (of agricultural products – IF-U) need to be exported. We realized that we need to invest in the fleet to ensure the possibility of export,” he said.
Mr. Osipov confirmed that Kernel currently owns one tanker and two bulk carriers, which provide the agricultural holding with 30% of sunflower oil and 20% of bulk cargo exports.
The group is currently exploring this area and has formed a new team to manage the fleet.
“These are slightly different competencies that the agricultural holding did not have before. This business is very competitive and not as simple as it seems at first glance,” admitted the SEO and added that the existing military bonus makes this business efficient.
Mr. Osipov noted that due to military risks, Kernel has not been buying new vessels and is considering investing in newer ones, although not this year – first it intends to learn how to balance with the existing fleet on the market. Currently, the agricultural holding’s fleet operates on a daily basis, delivering its agricultural products to Romania, the Mediterranean basin and Northern Europe, where it is gaining experience in shipping.
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. In addition, it is 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.
In October-December 2023, Kernel Agro Holding made additional investments to restore the transshipment of vegetable oils at the long-dormant Chornomorsk port, which it acquired in July 2023, allowing the company to start loading the first vessel with sunflower oil in January 2024.
“This was an important milestone in the revival of the company,” Kernel said in its quarterly report published on the Warsaw Stock Exchange.
It also notes that in December 2023, Kernel completed the acquisition of 100% of corporate rights in Reni-Oil LLC, a terminal in the port of Reni for transshipment of sunflower oil with a one-time storage capacity of 15 thousand tons of oil, for $24.75 million. It is indicated that this asset, located on the Danube, is important for the group, providing the ability to export sunflower oil even in the event of a blockade of the Black Sea ports.
According to the report, in December 2023, Kernel acquired a bulk carrier with a capacity of 50 thousand tons of grain, which became the third vessel in the company’s fleet and significantly expanded the group’s transportation and logistics capabilities.
In addition, in December 2023, Kernel launched the fifth cogeneration heat and power plant at one of its oil extraction plants with an installed capacity of 21 MW, which helps to increase resilience to the risk of potential power outages.
“According to the plan, the Group is working on commissioning a new modern oilseed processing plant located in Khmelnytsky region, which is scheduled to be commissioned in spring 2024. At the time of publication of this report, commissioning works have already begun. The plant with a capacity of 1 million tons of sunflower seeds per year will be the largest in Ukraine,” the document also says.
It specifies that in October-December 2023, the company spent $41 million on investments in fixed assets, including the purchase of a Supramax bunker.
As reported, in August last year, Kernel announced the purchase of vegetable oil transshipment facilities in the port of Chornomorsk for $19.4 million and a sunflower oil transshipment terminal in the port of Reni (both in Odesa region) for $24.75 million.
“The one-time storage of 105 thousand tons of sunflower oil will allow the group not to stop the operation of processing plants in case of transportation disruptions, as it was in the 2022-2023 financial years, and to smooth out logistics,” the agricultural holding commented on these acquisitions at the time. “Kernel added that the expansion of infrastructure is “vital” for the agricultural holding ahead of the commissioning of the Starokonstantinivsk oil extraction plant in Khmelnytsky region.
Kernel’s net profit for FY2023 amounted to $299 million, while the company ended the previous year 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.
In the first half of FY2024, Kernel’s net profit fell 3.6 times compared to the first half of FY2023, to $102 million, and EBITDA halved to $223 million, with revenue down 16% to $1.59 billion.
On Wednesday, the share price of Kernel, one of Ukraine’s largest agricultural groups, jumped by 26.7% on the Warsaw Stock Exchange, reaching the highest trading volume since mid-December last year.
According to the Warsaw Stock Exchange’s website, the shares rose from PLN10.49 to PLN13.30 at the opening of trading, with some deals being made at PLN13.90 per share.
As of 17:00 in Warsaw, the turnover reached 283.62 thousand shares, and the value of the transactions amounted to 3.50 million ($877 thousand at the current exchange rate).
Minority shareholders, who have united against the delisting plans and the earlier additional share issue, suggest that such activity may be related to the purchase of shares by the majority shareholder and the company’s CEO, Andrey Verevsky, to reach the 95% threshold and demand their mandatory redemption. However, there is no official confirmation of this information.
As reported, Verevsky’s Namsen increased its stake from 41.3% to 74.05%, or 62 million 222.46 thousand shares, as part of the share buyback announced in March 2023 for the further delisting of the agricultural holding from the Warsaw Stock Exchange: On May 12, Namsen bought back 30 million 248,449 thousand shares at a price of PLN18.5 per share (approximately $4.47 at the then exchange rate), which brought the total buyout price to approximately $136.1 million, while the company’s 2007 IPO was held at a price of PLN24.
During the over-allotment initiated by Wierewski in August 2023 among qualified investor shareholders, Namsen acquired another 212 million 634,916 thousand shares for a total over-allotment of 216 million shares. The purchase price was $0.2777 per share, for a total value of approximately $59.1 million, and the transaction was completed on September 1. The over-allotment shares are held in registered form and will not be admitted to trading on any stock exchange, Kernel said.
After the announcement on August 22, 2023, of the start of the pre-displacement and until September 15, the share price fell from PLN13.74 to a historic low of PLN6.34.
Subsequently, in November, Namsen acquired another 1.2 million shares in the company, or 0.4% of the total number, at a price of $1.875 per share, which, including treasury shares, increased Verevsky’s stake to 94.37% of the voting shares.
On March 21, Kernel’s shareholders’ meeting will consider reducing the company’s share capital by canceling 2.2%, or 6.602 million treasury shares owned by its subsidiary Etrecom Investments Limited. It is specified that as a result, the number of shares will be reduced to 293 million 429.23 thousand, and the share capital – to $7 million 748.29 thousand. In case of cancellation of treasury shares, the share of CEO Verevsky through his Namsen Limited will increase from 92.30% to 94.37%.
Minority shareholders have announced plans to challenge the move with the Luxembourg regulator and in the courts. On November 17, private investor Pavlo Boyko said that a group of investors was working with law firm Brucher Thieltgen & Partners. According to him, more than a thousand investors from all over the world have united, “from the smallest to 1 million shares.” The court will preliminarily consider the first lawsuit on March 18.
Before the war, Kernel was the world’s largest producer of sunflower oil (about 7% of global production) and the world’s largest exporter (about 12%). It is one of the largest producers and sellers of bottled oil in Ukraine. In addition, it is engaged in the cultivation and sale of agricultural products.
Kernel’s net profit for FY2023 amounted to $299 million, while the company ended the previous year 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.
“Kernel, one of Ukraine’s largest agricultural holdings, processed 811 thsd tonnes of sunflower seeds in the second quarter of fiscal year (FY) 2024, up 24% year-on-year, when the company’s operations were disrupted by power outages due to Russia’s attacks on Ukraine’s energy infrastructure.
“Two out of eight plants of the agricultural holding, which are located in Kharkiv region near the border with Russia, remain unavailable for work,” the company said in a financial report on its website on Monday.
According to the report, sales of sunflower oil in the second quarter of FY2024 increased by 13% compared to the same period last year and exceeded 388 thousand tons. High volumes of sunflower seeds processing are supported by various export logistics options, including deep-water Ukrainian Black Sea ports. At the same time, sales of bottled sunflower oil accounted for 6% of total sales.
In the first half of FY2024, Kernel’s elevator volumes increased by 21% year-on-year to 2.5 mln tonnes as the agricultural holding managed to complete the harvesting campaign in its Agriculture division on time, unlike the postponed harvesting campaign a year earlier.
According to the agroholding, it managed to increase export transshipment volumes through its terminals by 11.2 times in October-December 2023, up to 1,805 thousand tons, using the temporary commercial shipping corridor created by the Ukrainian Navy. This volume includes transshipment of grain, sunflower oil and meal, as well as transshipment services provided to third parties (65 thousand tons in the second quarter of FY2024).
This figure, according to Kernel, is 5% higher than the same period last year and is explained by the success of the agricultural holding, which was achieved during FY2023 as part of the Black Sea Grain Initiative.
However, export terminals operated below pre-war levels as they suffered from damage caused by Russian missile strikes on Kernel’s port infrastructure in the summer of 2023.
Due to the resumption of transshipment volumes at the export terminal, the volume of grain exports from Ukraine in the second quarter of FY 2024 increased 8.4 times compared to the previous quarter, reaching 1.705 thousand tons, the agricultural holding stated.
As reported, before the war, Kernel was the world’s largest producer of sunflower oil (about 7% of world production) and its exports (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.
In the first quarter of FY2024, the company posted a net loss of $30.9 million, while the previous year ended with a net profit of $162 million, with revenue down 17% to $564 million.
“Kernel, one of Ukraine’s largest agricultural holdings, has been using its Aeneid and Mavka vessels to export agricultural products for the second year in a row and intends to further expand its fleet, the agricultural holding reported on Facebook.
“For the second year, we have been operating our own vessels and transporting Ukrainian products in the difficult conditions of the termination of the grain deal. (…) Two Kernel vessels, Aeneid and Mavka, are currently exporting Ukrainian products. The deadweight (maximum loading) of the bulk carrier Aeneid is 47,335 tons, and the Mavka tanker is 13,500 tons. We have no plans to stop and are already working on expanding the fleet,” the statement said.
The agricultural holding noted that the use of its own fleet is economically beneficial, especially during the period of inflated freight rates during martial law. The development of its own shipping gives impetus to the entire market and strengthens the country’s export capabilities, Kernel believes.
“The Black Sea remains the only alternative for Ukrainian exports. The deep-water ports are able to accumulate and ship large-tonnage consignments of more than 60 thousand tons. This makes it possible to optimize logistics processes and significantly reduce costs. All alternative routes have extremely high logistics costs,” the agricultural holding explained and promised to continue to strengthen Ukraine’s exports and contribute to food stability in Europe and the world.
As reported, before the war, Kernel was the world’s largest producer of sunflower oil (about 7% of global production) and its exports (about 12%). It is one of the largest producers and sellers of bottled oil in Ukraine. In addition, it is engaged in the cultivation and sale of agricultural products.
In the first quarter of FY2024, the company posted a net loss of $30.9 million, while the previous year ended with a net profit of $162 million, with a 17% decrease in revenue to $564 million.
According to the report, the book value per share for the year decreased from $20.7 to $6 (or PLN26.22), in particular due to an increase in the number of shares from 77.429 million to 147.864 million.
Kernel Agro Holding has completed the 2023 harvest and achieved a record corn yield of 10.2 tons per hectare, up 15% year-on-year, amid exceptionally favorable weather conditions during the season.
According to the company’s report for the first quarter of fiscal year 2024 (FY, July-October 2023), sunflower yield increased by 11% year-on-year to 2.8 tons per hectare, and soybean yield – 2.9 tons per hectare.
“Unlike last year, there were no serious disruptions during the 2023 harvesting campaign due to the war in Ukraine or other factors,” the document says.
According to the document, Kernel has completed sowing winter crops for the 2024 harvest, allocating 93 thousand hectares for winter wheat and 14 thousand hectares for rapeseed, while last year winter wheat plantings were significantly lower – 60.4 thousand hectares, or 17% of the sown area, and the area under rapeseed was reported as “insignificant”.
The document specifies that due to the reduction of corn area by 44% to 84.4 thou hectares, the harvest decreased by 35% to 861 thou tons, while the increase of corn area by 75% to 61.1 thou hectares with the growth of yield by 44% to 6.7 t/ha allowed to harvest 2.5 times more – 406 thou tons.
As for oilseeds, the soybean harvest exceeded last year’s by 10 times, amounting to 188 thsd tonnes, thanks to the same expansion of the area while maintaining yields. Sunflower was harvested in the amount of 335 thou tons, which, due to the increase in yield, allowed the company to exceed the previous year’s figure by 1% while maintaining the area by 8% – up to 119.7 thou hectares.
The area under other crops this year was reduced by 32% to 28.4 thousand hectares, according to the report.
“Kernel also reported that during the three months ended September 30, 2023, it sold one of its elevators in Kharkiv region: with a net asset value of $175 thousand, the cash consideration received amounted to $1.067 million.
It is noted that in December 2023, Kernel launched the group’s fifth cogeneration thermal power plant at the Prydniprovskyi oil extraction plant with an installed capacity of 21 MW.
The company confirmed that it plans to commission a new state-of-the-art extraction plant in Khmelnytsky region in spring 2024 with a capacity of 1 million tons of sunflower seeds per year, making it the largest in Ukraine.
The report specifies that since the beginning of the war, 1502 employees of the agricultural holding have been mobilized to serve in the Armed Forces of Ukraine or joined territorial defense units, of which 648 have been demobilized and returned to work, 39 employees were killed and 87 others were injured.
As reported, in the first quarter of FY2024, Kernel posted a net loss of $30.9 million, while the previous year ended with a net profit of $162 million, with revenue down 17% to $564 million.
According to the report, the book value per share for the year decreased from $20.7 to $6 (or PLN26.22), in particular due to the increase in the number of shares from 77.429 million to 147.864 million.
