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 2014. Brief summary of key developments over the reporting period is described below.
Revenue, cost of sales and gross profit
In 1H 2014 total revenue increased by 6% to USD 34 920 ths triggered by increased sales volume in egg segment. Cost of sales decreased by 5% to USD 22 950 ths mainly as a result of lower poultry fodder cost over the reporting period. Gross profit increased by 29% to USD 13 679 ths representing a 39% gross profit margin compared to 32% margin in 1H 2013.
Operating profit and EBITDA
The reporting period has been marked by a decrease of selling expenses by 20% to USD 2 055 ths and an increase of other operating income 2.5 times to USD 1 319 ths on the back of higher amounts of refund under special VAT treatment. As a result of these developments, EBITDA increased by 42% to USD 13 451 ths and operating profit increased by 67% to USD 11 418 ths.
In 1H 2014 profit before tax and net profit increased by 66% to USD 11 278 ths and by 67% to USD 11 225 ths, respectively. Net profit margin over the six months of 2014 reached 32% compared to 20% in 1H 2013.
As at 30 June 2014 total poultry flock increased by 12% y-o-y to 4.9 mln hens while laying hens flock increased by 23% y-o-y to 4.1 mln hens.
Over the reporting period, egg production increased by 11% year on year to 468 million eggs. Egg sales volume increased by 16% to 298 million eggs resulting in higher sales volumes of branded eggs and eggs exported. Average shell egg sales price increased by 17% to 0.703 UAH/piece.
Production volume of dry egg products increased by 16% to 907 tons while production volume of liquid egg products decreased by 7% to 2 969 tons. Sales volume of dry egg products increased by 10% y-o-y to 786 tons while export sales increased by 18% to 391 tons. Sales volume of liquid egg products decreased by 7% to 2 962 tons as a result of temporary decline in purchase volumes for certain clients whose production capacities are located in the Eastern region of Ukraine. Average sales price of liquid egg products increased by 9% to 16.35 UAH/kg; average sales price of dry egg products increased by 17% to 53.19 UAH/kg.
Investment program update
Over the year 2014, the Group plans to complete reconstruction of 3 laying hens houses 326 ths hen places each, 1 young laying hens house of 130 ths hen places and 1 parent flock house of 29 ths poultry places. As of today, one laying hens house of 326 ths hen places and one poultry house for the parent flock of 29 ths poultry places have been put into operation.
The Group’s CEO Borys Bielikov has noted:
“Overall, Ovostar Union management is content with the operational and financial results for the first half of 2014 given present-day situation. We decreased to some extent our currency exchange exposure through increased volumes of eggs and egg products sold to export destinations. Strong financial position allows us to concentrate on business development. Following the chosen concept of organic growth, we continue expansion of our production complex in Stavysche.
Our nation faces numerous challenges right now trying to overcome economic and political crisis. We express our sincere condolences to the families and friends of the victims fallen in the course of military actions in Donetsk and Lugansk regions. Ovostar Union team hopes that parties to the conflict will be prudent and willing to compromise. We look forward for the route of peace to be found in the upcoming months.”
*All prices are indicated net of VAT (20%)