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 publication of the Group’s report for the first half of 2013. Brief summary of key developments over the reporting period is described below.
Revenues, cost of sales and gross profit
In H1 2013 total revenue of the Group increased by 19% to USD 33,098 ths as a result of increased sales volumes in all three segments. Over the same period, the Group’s cost of sales increased by 35% to USD 24,033 ths, growing at a faster pace in comparison to the revenue mainly due to higher realized fodder cost and low grain yields in 2012. As a result, gross profit decreased by 22% to USD 10,635 ths. At the same time, the projected volumes of harvest for year 2013 are more optimistic giving solid grounds to forecast decrease in grain costs in the second half of the year.
Operating profit and EBITDA
In H1 2013 EBITDA decreased by 28% to USD 9,476 ths while EBITDA margin amounted to 29% compared to 47% in H1 2012. Over the same period, operating profit of the Group decreased by 42% to USD 6,842 ths. Selling expenses increased by 68% to USD 2,560 ths and administrative expenses increased by 30% to USD 1,208 ths as a result of increased sales volumes in all segments.
In H1 2013 net profit decreased by 44% to USD 6,739 ths over the same period last year.
In the first half of 2013 the Group increased its total flock by 26% over the same period last year to 4.38 mln from 3.48 mln (the Group’s laying hens flock increased by 37% to 3.36 mln laying hens from 2.45 mln in 1H 2012). Egg production increased by 30% YoY to 422 mln eggs while volume of eggs sold increased by 14% to 257 mln. The average egg sales price amounted to USD 0.75*/10 eggs, decreasing by 8% from USD 0.82*/10 eggs in the first half of 2012 as in 2013 egg selling price did not show the expected growth for traditionally high season before Easter.
In the first half of 2013 the Group produced 781 tons of dry and 3,188 tons of liquid egg products, a 29% and 46% increase YoY, respectively. Sales volume of liquid egg products increased by 49% to 3,188 tons while sales of dry egg products increased by 83% to 713 tons. Although the prices for individual egg products remained comparable to the same period previous year, a change in product sales mix has driven the average sales price of liquid egg products down by 4% to USD 187*/ton from USD 194*/ton in H1 2012 while the average sales price of dry egg products has increased by 5% over the same time period to USD 567*/ton from USD 539*/ton.
Investment program update
Production expansion is going in accordance with previously announced plans. In December 2013, total capacity of Ovostar Union egg production facilities will reach 5.4 mln laying hen places.
The Group’s CEO Borys Bielikov has noted:
“Ovostar Union continues growth in its key segments of egg and egg products production through expansion production capacities as well as increase in volumes sold through retail and export. Growing demand for our products from the side of local and export customers supports our intention to continue growth in similar manner in the mid-term perspective.”
*All prices net of VAT (20%)
UAH/USD exchange rate (H1 2013 average) = 7.9930
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