Ovostar Union N.V. (WSE: OVO) (hereinafter “the Group”), a vertically integrated holding company, one of the leading egg and egg products producers in Ukraine, announces its financial results for the nine months ended 30 September 2016.

Revenue, gross profit and gross margin

In 9M 2016 the Group’s revenue increased by 2% year-on-year to mUSD 53.7 from mUSD 52.8. The gross profit amounted to mUSD 16.3 representing 30% gross margin (9M 2015: mUSD 22.3 and 42% respectively). The export sales contributed mUSD 19.4, showing a 26% growth y-o-y. The share of export sales amounted to 36% of total revenue over the reporting period.

Operating profit, EBITDA and cash flow from the operating activities

During 9M 2016 operating profit decreased by 45% to mUSD 12.4 from mUSD 22.6. Meanwhile, EBITDA amounted to mUSD 14.2 resulting in the EBITDA margin of 26% (9M 2015: mUSD 24.3 and 46% respectively). Over the reporting period cash flows from the Group’s operating activities equaled to mUSD 11.0.

Net profit and exchange differences on translation to presentation currency

Over the 9 months of 2016 net profit amounted to mUSD 12.2, while the net profit margin reached 23% (9M 2015: mUSD 22.3 and 42% respectively). In line with the devaluation of Ukrainian hryvnia during the 9M 2016, the Group has accumulated negative exchange differences on translation to presentation currency in the amount of mUSD 7.5 that are reflected in the Group’s other comprehensive income.

The Group’s CEO Borys Bielikov noted:

“Overall, the management of the Group is satisfied with the results for the nine months of 2016. The decrease in marginality is caused by two significant factors: the changes to the tax code effective from 01 January 2016 with regard to VAT regime for agricultural companies and the growth of prices on fodder components in USD terms.”