22 Nov 2012 07:00
22 November 2012
AVANGARDCO INVESTMENTS PUBLIC LIMITED
Operational and unaudited financial results for 3Q and for the first 9 months of 2012
Kyiv, Ukraine - AVANGARDCO INVESTMENTS PUBLIC LIMITED (LSE: AVGR) (the "Company", or "AVANGARDCO IPL"), the leading producer of shell eggs and egg products in Ukraine and number one producer in Eurasia, announces operating and unaudited financial results for 3Q 2012 and for the first 9 months of 2012 ended 30 September 2012.
Operational highlights for 3Q 2012
·; Total shell eggs production grew by 3.7% YoY to 1,579 m (3Q 2011: 1,523 m)
·; Shell eggs sales to external buyers increased by 5.2% YoY to 1,467 m (3Q 2011: 1,394 m)
·; Average sales price of shell eggs grew by 12.5% YoY to UAH 0.63/egg excl. VAT (3Q 2011: UAH 0.56/egg excl. VAT)
·; Egg processing volume increased by 3.2% YoYto 259 m (3Q 2011: 251 m)
·; Average selling price of dry egg products grew by 3.2% YoY to USD 7.37/kg (3Q 2011: USD 7.14/kg).
Operational highlights for the first 9 months of 2012
·; As at 30 September 2012, the Company's poultry flock grew by 11.8% YoY to 27.4 m (30 September 2011: 24.5 m). The laying hens flock increased by 5.9% YoY to 21.6 m (9M 2011: 20.4 m)
·; Total shell eggs production grew by 6.5% YoY to 4,685 m (9M 2011: 4,398 m)
·; Shell eggs sales to external buyers increased by 9.8%YoY to 3,879 m (9M 2011: 3,533 m)
·; Average sales price of shell eggs grew by 20.4% YoY to UAH 0.65/egg excl. VAT (9M 2011: UAH 0.54/egg excl. VAT)
·; Egg processing volume increased by 1.9% YoY to 800 m (9M 2011: 785 m)
·; Average selling price of dry egg products grew by 7.5% YoY to USD 7.46/kg (9M 2011: USD 6.94/kg).
Financial highlights for 3Q 2012
·; Consolidated revenue rose by 46.2% YoY to USD 162.2 m (3Q 2012: USD 110.9 m)
·; EBITDA rose by 45.5% YoY to USD 71.8 m (3Q 2011: USD 49.4 m). EBITDA margin was 44.3% (3Q2011: 44.5%)
·; Net income was up by 38.7% YoY to USD 59.4 m (3Q 2011: USD 42.8 m). Net income margin for the period was 36.6% (3Q 2011: 38.6%).
Financial highlights for the first 9 months of 2012
·; Revenue increased by 33.1% YoY to USD 445.8 m (9M 2011: USD 334.9 m)
·; EBITDA grew by 38.0% YoY to USD 194.0 m (9M 2011: USD 140.6 m) with EBITDA margin expanding to 43.5% (9M 2011: 42.0%)
·; Net income rose by 42.9% YoY to USD 157.0 m (9M 2011: USD 109.9 m) with net income margin up to 35.2% (9M 2011: 32.8%).
Nataliya Vasylyuk, CEO of AVANGARDCO IPL, commented:
"I am delighted to present our results for the first 9 months of 2012 which continue to demonstrate strong growth across all key financial and operational indicators, underpinning the Company's leadership in the shell eggs and egg products market both in Ukraine and Eurasia. Our strategy, aimed at increasing production volumes, entering new sales markets and controlling our costs, continues to prove its effectiveness: the Company's revenue grew by 33% year-on-year in the first 9 months of 2012, and our net income increased by 43%.
These results were achieved through increasing production volumes on the back of the steadily growing demand for our products both domestically and internationally. I would like to stress that while the prices of shell eggs and egg products have risen year-on-year, we continued to keep our production costs at a relatively low level through our successful grain purchasing strategy, which allowed us to hedge against fluctuations in grain prices.
We expect AVANGARDCO IPL to show healthy financial results for the full year, as we continue to implement our stated development strategy."
A conference call for analysts and investors is scheduled for today, 9:00 EST, 14:00 GMT, 16:00 Kyiv time, and 18:00 Moscow time.
International number: | +44 (0)20 7162 0025 |
Toll-free line in Russia: | 81 0800 2806 3011 |
Password: | Avangard |
The presentation slides will be streamed in real time at: http://wcc.webeventservices.com/r.htm?e=544254&s=1&k=2B78DCC69DBA46EDDEC0ECFAD70FC194&cb=blank
Financial report for the first nine months of 2012 is available on our website at: http://avangard.co.ua/eng/for-investors/financial-overview/financial-reports/interim-reports/. Please contact us at ir@avangardco.ua if there are problems with the file download.
Please make sure you are logged in 15 minutes before the conference call.
Financial summary:
Unit | 3Q 2012 | 3Q 2011 | Change, % | 9 months 2012 | 9 months 2011 | Change, % | |
Revenue | USD '000 | 162, 191 | 110, 928 | 46,2 | 445, 753 | 334, 868 | 33.1 |
Gross profit | USD '000 | 60, 022 | 43, 880 | 36.8 | 173, 960 | 128, 143 | 35.8 |
Gross margin | % | 37.0 | 39.6 | -2.6 | 39,0 | 38.3 | 0.7 |
EBITDA | USD '000 | 71, 840 | 49, 364 | 45.5 | 193, 967 | 140, 558 | 38.0 |
EBITDA margin | % | 44.3 | 44.5 | -0.2 | 43.5 | 42.0 | 1.5 |
Operating profit | USD '000 | 68, 032 | 45, 818 | 48.5 | 182, 515 | 129, 915 | 40.5 |
Operating margin | % | 41.9 | 41.3 | 0.6 | 40.9 | 38.8 | 2.1 |
Net income | USD '000 | 59, 377 | 42, 815 | 38.7 | 156, 977 | 109, 851 | 42.9 |
Net margin | % | 36.6 | 38.6 | -2.0 | 35.2 | 32.8 | 2.4 |
Financial results overview for 3Q 2012
In the reporting quarter, the Company's consolidated revenue amounted to USD 162.2 million (3Q 2011: USD 110.9 million). Its 46.2% year-on-year growth is attributed to the increase in sales of the Company's two main segments, shell eggs and egg products, and the growth in shell egg prices due to favorable market conditions.
The Company reported gross profit of USD 60.0 million (3Q 2011: USD 43.9 million), a 36.8% increase year-on-year. The Company's gross margin was 37.0% (3Q 2011: 39.6%). Its 2.6% decrease is due to year on year decrease in share of income from revaluation of biological assets in the total amount of gross profit.
EBITDA grew by 45.5% year-on-year to USD 71.8 million (3Q 2011: USD 49.4 million). EBITDA margin was 44.3% (3Q 2011:44.5%).
The Company's net income was up by 38.7% year-on-year to USD 59.4 million (3Q 2011: USD 42.8 million) with net income margin 36.6% (3Q 2011: 38.6%).
Financial results overview for the first 9 months of 2012
During the reporting period, the Company's consolidated revenue growth showed a year-on-year increase of 33.1%, reaching USD 445.8 million (9M 2011: USD 334.9 million). The growth resulted from the increased sales in two main segments of the business and a significant rise in prices of shell eggs and egg products (20.4% year-on-year and 7.5% year-on-year, respectively). Revenue from the sale of shell eggs and egg products accounted for 86.3% of the Company's total revenue for the period (9M 2011: 83.4%), reaching USD 384.8 million (9M 2011: USD 279.4 million). Export revenue from the sale of shell eggs and egg products stood at USD 69.5 million (9M 2011: USD 13.2 million), or 15.6% of the Company's total revenue.
Gross profit for the reporting period amounted to USD 174.0 million, a 35.8% increase year-on-year compared to USD 128.1 million for the first 9 months of 2011. This growth resulted primarily from strong sales, as well as an increase in the selling price in two main product groups - shell eggs and egg products. Gross margin also increased to 39.0% (9M 2011: 38.3%).
The Company's EBITDA was up by 38.0% year-on-year to USD 194.0 million (9M 2011: USD 140.6 million), with EBITDA margin showing a year-on-year increase of 1.5% to 43.5%.
Net income for the first 9 months of 2012 rose by 42.9% year-on-year to USD 157.0 million (9M 2011: USD 109.9 million) with net income margin growing by 2.4% to 35.2% (9M 2011: 32.8%).
The Company's net operating cash flow for the first 9 months of 2012 was USD 167.4 million (9M 2011: USD 61.1 million).
Net cash used in investing activities stood at USD 227.1 million (9M 2011: USD 123.2 million).
Net cash used in financing activities was USD 4.7 million (9M 2011: USD 39.4 million).
At the end of the reporting period, the Company's net debt was USD 153.2 million, compared to USD 155.2 million in the previous period.
Net debt / EBITDA ratio was 0.5 (based on 12-month EBITDA). The Company's leverage is relatively low, compared its market peers.
Operational overview by segment:
Unit | As at 30 September 2012 | As at 30 September 2011 | Change, % | |
Total flock | bird (m) | 27.4 | 24.5 | 11.8 |
Laying hens flock | bird (m) | 21.6 | 20.4 | 5.9 |
The Company's total poultry flock grew by 11.8% year-on-year, while the laying hens flock increased by 5.9% year-on-year.
Shell eggs segment
Unit | 3Q 2012 | 3Q 2011 | Change, % | 9 months2012 | 9 months 2011 | Change,% | |
Production | egg (m) | 1,579 | 1,523 | 3.7 | 4,685 | 4,398 | 6.5 |
Sales to external buyers |
egg (m) | 1,467 | 1,394 | 5.2 | 3,879 | 3,533 | 9.8 |
Export | egg (m) | 149.7 | 101.2 | 47.9 | 303.9 | 107.5 | 182.7 |
Average selling price | UAH(excl. VAT) | 0.63 | 0.56 | 12.5 | 0.65 | 0.54 | 20.4 |
In 3Q 2012, the production of eggs grew by 3.7% year-on-year and by 6.5% year-on-year in the first 9 months of 2012, as a result of the growth of the laying hens flock.
In 3Q 2012, the average selling price of shell eggs grew by 12.5% year-on-year to UAH 0.63/egg excl. VAT (3Q 2011: UAH 0.56/egg excl. VAT). Over the first 9 months of 2012, the average selling price of shell eggs increased by 20.4% year-on-year, following the growth in prices across all distribution channels.
In the reporting quarter, the sales of shell eggs increased by 5.2% year-on-year as a result of growth in domestic distribution channels and increase in exports. Over the first 9 months of 2012, the sales of shell eggs increased by 9.8% year-on-year. The Company remains focused on the development of the existing domestic distribution channels and export sales, as well as growing sales through retail chains.
In the reporting quarter, the Company increased its exports of shell eggs by 47.9% year-on-year to 149.7 million eggs (3Q 2011: 101.2 million). In the first nine months of 2012, eggs export sales nearly tripled year-on-year. The Company exported shell eggs to the markets of Middle East and North Africa region, Central and West Africa countries and the CIS.
Kvochka brand
·; In 3Q 2012, the Company started offering its Kvochka-branded products through Megamarket, Ashan and Perekrestok retail chains. As at 30 September 2012, the Company's branded products were sold in 12 major national retail chains.
·; The Company is expanding its products' presence in traditional retail outlets through a distributor. In the reporting period, Kvochka-branded products were sold in over 350 traditional retail outlets. In total the Company's packaged products are sold in over 1,500 outlets.
·; AVANGARDCO IPL continues to expand the shelf presence of Kvochka-branded products through large marketing campaigns and in-store advertising and promotions.
Eggs products segment
Unit | 3Q 2012 | 3Q 2011 | Change,% | 9 months 2012 | 9 months 2011 | Change,% | |
Eggs processed | egg (m) | 259 | 251 | 3.2 | 800 | 785 | 1.9 |
Averages selling price | USD/kg (excl. VAT) | 7.37 | 7.14 | 3.2 | 7.46 | 6.94 | 7.5 |
In the reporting period, LLC Imperovo Foods, the Company's shell eggs processing plant, was working at full production capacity and increased the volume of processed eggs by 3.2% year-on-year in 3Q2012 and by 1.9% year-on-year for the first 9 months of 2012.
In the reporting quarter, the average selling price of dry egg productsincreased by 3.2% year-on-year to USD 7.37/kg (3Q 2011: USD 7.14/kg). In the first 9 months of 2012, the average selling price increased by 7.5% year-on-year to USD 7.46/kg (9M 2011: USD 6.94/kg) due to changes in the product range.
During the first 9 months of 2012, the Company was exporting egg products to the Middle East, North Africa, and Asia.
Investment projects
Construction of two poultry complexes, Avis in the Khmelnitsky Region and Chornobaivske in the Kherson Region, is proceeding according to schedule.
Avis
·; Second stage of the rearing site with a capacity of 1 million birds will be commissioned in 1H 2013.
·; Second stage of the laying hens site for 2.2 million birds will be commissioned in 2H 2013 (line 1 of the second stage was commissioned in October 2012).
·; Feed mill with an annual capacity of 500,000 tonnes comprising a soya bean extrusion plant and a grain elevator for 56,000 tonnes will be commissioned in April 2013. The equipment for the mill has been delivered in full, and installation works are under way.
·; Construction of the 56,000 tonnes grain elevator for the feed mill has been completed. In October 2012, the grain elevator received its first shipments of grain.
Chornobaivske
·; Second stage of the rearing site with a capacity of 1 million birds will be commissioned in 1H 2013.
·; First stage of the laying hens site for 1.75 million birds has been commissioned.
·; Second stage of the laying hens site for 1.26 million birds will be commissioned in 1H 2013.
·; Third stage with a capacity of 2.967 million birds will be commissioned in 2H 2013.
·; Feed mill with an annual capacity of 500,000 tonnes comprising a full-fat soya bean line with a capacity of 30 tonnes/hr and a grain elevator with a capacity of 56,000 tonnes will be commissioned in 2H 2013. The equipment for the facilities has been paid for and will be delivered starting February 2013. The site is being prepared for construction, which is scheduled to begin in December 2012.
LLC Imperovo Foods, shell eggs processing plant
·; Currently, the Company is implementing Stage 1 of the project aimed at increasing the facility's egg processing capacity from 3 million to 6 million eggs per day.
The construction progress at Avis and Chornobaivske complexes can be tracked at: http://avangard.co.ua/eng/about/projects/
-END-
IR contacts:
Alina Korniets
AVANGARDCO IPL
Acting Head of Investor Relations
Telephone: +38 044 393 40 50
Mobile: +38 067 664 49 99
e-mail: a.korniets@avangardco.ua
FTI Consulting London Larisa Kogut-Millings +44 (0) 20 72 69 7216 | FTI Consulting Moscow Oleg Leonov Olga Terebova +7 495 795 06 23 |
# # #
Notes to Editors:
Avangardco IPL is one of Ukraine's largest agro-industrial companies, specialising in production of shell eggs and egg products. As at 30 September, 2012, the total poultry flock of the Company was 27.4 million birds. The Company's facilities are located in 14 regions of Ukraine and the Autonomous Republic of Crimea. The Company exported its products to 34 countries, mostly in the Middle East, Asia, and the CIS. As at 30 September 2012, the Company's revenue amounted to USD 445.8 million (9M 2011: USD 334.9 million), and EBITDA reached USD 194.0 million (9M 2011: USD 140.6 million).
The Company's Global Depositary Receipts have been traded on the London Stock Exchange since May 2010. The Company's Eurobonds of around USD 200 million with a maturity on 29 October, 2015 were included in the official list of the UK Listing Authority (UKLA) and admitted to trading on the regulated market of the London Stock Exchange starting 1 November, 2010.
# # #
Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of Avangardco IPL. You can identify forward-looking statements by terms such as "expect", "believe", "anticipate", "estimate", "intend", "will", "could", "may", or "might", the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in the Company's geographical locations, rapid technological and market changes in our industry, as well as many other risks specifically related to Avangardco IPL and its operations.
Interim consolidated statement of financial position
AS AT 30 September 2012
(in USD thousand, unless otherwise stated)
30 September 2012 | 31 December 2011 | |
ASSETS | ||
Property, plant and equipment | 718, 394 | 512, 697 |
Non-current biological assets | 49, 792 | 44, 304 |
Deferred tax assets | 1, 912 | 1, 922 |
Other non-current assets | 100, 499 | 93, 041 |
Total non-current assets | 870, 597 | 651, 964 |
Inventories | 138, 987 | 202, 279 |
Current biological assets | 52, 862 | 58, 916 |
Trade accounts receivable, net | 69, 803 | 51, 437 |
Prepaid income tax | 4 | - |
Prepayments and other current assets, net | 68, 778 | 26, 946 |
Taxes recoverable and prepaid | 105, 690 | 76, 298 |
Cash and cash equivalents | 182, 601 | 237, 814 |
Total current assets | 618, 725 | 653, 690 |
TOTAL ASSETS | 1, 489, 322 | 1, 305, 654 |
EQUITY | ||
Share capital | 836 | 836 |
Share premium | 201, 164 | 201, 164 |
Reserve capital | 115, 858 | 115, 858 |
Retained earnings | 828, 241 | 673, 909 |
Effect of translation into presentation currency | (68, 184) | (67, 761) |
Equity attributable to the owners of the Company | 1, 077, 915 | 924, 006 |
Non-controlling interest | 17,974 | 15, 333 |
Total equity | 1, 095, 889 | 939, 339 |
LIABILITIES | ||
Long-term loans | 4, 326 | 15, 384 |
Long-term bond liabilities | 195, 458 | 194, 563 |
Deferred tax liabilities | 55 | 86 |
Deferred income (non-current portion) | 5 ,122 | 5, 351 |
Long-term finance lease | 1, 917 | 3, 830 |
Total non-current liabilities | 206, 878 | 219, 214 |
Short-term bond liabilities | 25, 022 | 25, 013 |
Current portion of non-current liabilities | 33, 532 | 26, 565 |
Short-term loans | 75, 807 | 53, 063 |
Trade payables | 20, 247 | 17, 894 |
Accrued expenses | 1, 900 | 1, 601 |
Other current liabilities and accrued expenses | 30, 047 | 22, 965 |
Total current liabilities | 186, 555 | 147, 101 |
TOTAL LIABILITIES | 393, 433 | 366, 315 |
TOTAL EQUITY AND LIABILITIES | 1, 489, 322 | 1, 305, 654 |
Interim consolidated statement of comprehensive income
FOR THE 9 months ended 30 September 2012
(in USD thousand, unless otherwise stated)
9 months ended | ||
30 September 2012 | 30 September 2011 | |
Revenue | 445, 753 | 334, 868 |
Income from revaluation of biological assets at fair value | 27, 592 | 26, 292 |
Cost of sales | (299, 385) | (233, 017) |
GROSS PROFIT | 173, 960 | 128, 143 |
General administrative expenses | (17, 633) | (8, 734) |
Distribution expenses | (15, 307) | (7, 137) |
Income from government grants and incentives | 226 | 239 |
Income from special VAT treatment | 36, 101 | 23, 665 |
Other operating income/expenses, net | 5,168 | (6, 261) |
OPERATING PROFIT | 182, 515 | 129, 915 |
Finance income | 555 | 1, 339 |
Finance cost | (26, 083) | (19, 283) |
PROFIT BEFORE TAX | 156, 987 | 111, 971 |
Income tax expense | (10) | (2, 120) |
PROFIT FOR THE PERIOD | 156, 977 | 109, 851 |
OTHER COMPREHENSIVE INCOME FOR THE PERIOD: | ||
Effect of translation into presentation currency | (426) | (1, 167) |
TOTAL COMPREHENSIVE INCOME | 156, 551 | 108, 684 |
PROFIT FOR THE PERIOD ATTRIBUTABLE TO | ||
Owners of the Company | 154, 333 | 107, 194 |
Non-controlling interests | 2, 644 | 2, 657 |
156, 977 | 109, 851 | |
TOTAL COMPREHENSIVE INCOME ATTRIBUTABLE TO: | ||
Owners of the Company | 153, 910 | 106, 027 |
Non-controlling interests | 2, 641 | 2, 657 |
156, 551 | 108, 684 | |
Earnings for the year per share, USD (basic and diluted) | 24 | 17 |
Interim consolidated statement of cash flows
FOR THE 9 months ended 30 September 2012
(in USD thousand, unless otherwise stated)
9 months ended | ||
30 September 2012 | 30 September 2011 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Profit before income tax | 156, 987 | 111, 971 |
Adjustments for: | ||
Depreciation of property, plant and equipment | 11, 452 | 10, 643 |
Change in allowance for irrecoverable amounts | 1, 077 | 363 |
Other provisions | 299 | 879 |
Loss on disposal of current assets | 220 | 156 |
Loss on disposal of property, plant and equipment | 30 | 154 |
Impairment of current assets | 850 | - |
Other income | (1, 573) | - |
Effect of fair value adjustments on biological assets | (27, 592) | (26, 292) |
Gains realised from accounts payable written-off | (768) | (7) |
Amortization of deferred income on government grants | (226) | (275) |
Loss from VAT government bonds sale | - | 32 |
Discount on long-term bonds amortization | 895 | 804 |
Interest income | (555) | (1, 329) |
Interest payable on loans | 23, 812 | 17, 943 |
Operating profit before working capital changes | 164, 908 | 115, 042 |
Decrease/(increase) in trade receivables | (18, 611) | 2, 927 |
(Increase) in prepayments and other current assets | (42, 664) | (17, 851) |
Decrease/(increase) in taxes recoverable and prepaid | (29, 392) | (15, 781) |
Decrease in inventories | 65, 910 | (40, 279) |
Increase in deferred income | (3) | 69 |
Decrease in trade payables | 3, 121 | (3, 807) |
(Increase)/decrease in biological assets | 28, 158 | 21, 682 |
(Decrease)/increase in finance leases | (1, 917) | - |
Increase/(decrease) in advances received and other current liabilities and accruals | 4, 999 | 4, 419 |
Cash generated from operations | 174, 509 | 66, 421 |
Interest paid | (7, 106) | (5, 311) |
Income tax paid | (39) | (5) |
Net cash generated from operating activities | 167, 364 | 61, 105 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchases of property, plant and equipment | (227, 684) | (107, 079) |
Acquisition of Company | - | (17, 721) |
VAT government bonds sale | 230 | |
Interest received | 555 | 1, 339 |
Net cash used in investing activities | (227, 129) | (123, 231) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
New loans received | 39 555 | 91 056 |
Repayment of loans | (20 897) | (37 757) |
Interest paid for bonds issued | (13 984) | (13 837) |
Proceeds from short-term bonds issued | - | (19) |
Net cash generated from/(used in) financing activities | 4 674 | 39 443 |
Effect from translation into presentation currency | (121) | - |
Decrease/(increase) in restricted cash | 2 327 | (9 878) |
Net increase/(decrease) in cash | (52 885) | (22 683) |
Cash at the beginning of the year | 230 640 | 183 065 |
Cash at the end of the year | 177 754 | 150 498 |