Kernel increases its net profit 4.3 times, EBITDA 2.1 times in FY2021

KYIV. Oct 4 (Interfax-Ukraine) – Kernel, one of the largest Ukrainian agrarian groups, in fiscal 2021 (FY, July 2020 – June 2021), saw $513 million in net profit, which is 4.3 times higher than its similar indicator for FY2020, while its EBITDA grew 2.1 times, to $929 million.

Revenue in FY2021 increased 38% to $5.65 billion thanks to high world prices for grains and sunflower oil, according to a financial report posted on the company’s website on Monday.

"Net profit attributable to shareholders exceeded half a billion US$, equaling to the combined profits of four previous years. And the financial leverage reduced to 0.9x net-debt-to-EBITDA as of 30 June 2021, the lowest level for the past five years," the agricultural holding said, citing its founder and Board Chairman Andriy Verevsky.

The agroholding said that in FY2021, its consolidated net income was $643 million, which is 5.2 times bigger than in FY2020, and being more than the group generated in total over four previous years FY2017-FY2020. At the same time, the net profit attributable to equity holders of Kernel Holding S.A. amounted to $513 million, and the remaining $130 million of net profit was received from non-controlling interest.

Kernel said in the financial report that as of June 30, 2021, its total assets increased compared to the same date in 2020 by 26.3%, to $3.99 billion, gross profit doubled to $903 million, the company’s current debt obligations increased 1.9 times, to $783 million, and long-term debt decreased 10%, to $1.13 billion.

The agricultural holding’s revenue in the oilseed processing segment in FY2021 increased by 13% to $1.75 billion, in the infrastructure and trading segment grew by 43%, to $4.91 billion, farming – by 9% to $657 million.

The largest volumes of EBITDA of the company in FY2021 were generated by the infrastructure and trading segment – $496 million (2.3 times more than in FY2020), farming – $461 million (3.4 times more), while EBITDA in the oilseed processing segment decreased by 63%, to $56 million. The agroholding also said that in the farming segment, each hectare of land cultivated in FY2021 generated EBITDA of $920.

"The key factor behind the stellar performance was Avere trading business, which contributed with $385 million EBITDA in FY2021, more than 10 times exceeding the previous year result. While we are pleased with such earnings, we do not consider it as a sustainable in the long run," the company said in a report.

The agricultural holding said that it owns 60% of the authorized capital of its subsidiary Avere (Switzerland). It is a research and knowledge platform founded in FY2018 and headquartered in Switzerland, with representative offices in United States, Singapore, and China, which sells sunflower oil produced at the Kernel plants and oil from other producers of the Black Sea region, and also helps to hedge Kernel’s growing grain export volumes and farming produce.

In FY2021, Avere sold 76% of the group’s sunflower oil FOB (free on board), up from 12.5% in FY2020.

Kernel said that it plans to obtain shareholder approval in FY2022 for a $0.44 per share dividend for a total of $35.6 million.

"Distributing FY2020 profits, the company paid a $35 million dividend in January 2021, increasing it by 70% from the level paid over six previous years," the agricultural holding said in a report.

Kernel in FY2021 reduced sunflower seed processing by 7% compared to FY20, to 3.2 million tonnes, due to low harvest of sunflower seeds in Ukraine, and sales of sunflower oil decreased 6.7%, to 1.4 million tonnes.

According to the report, the agricultural holding ranks first in the world in the production of sunflower oil (about 7% of world production) and its export (about 12%), and is also the largest producer and seller of bottled sunflower oil in Ukraine.

Kernel is a large producer and exporter of sunflower oil, operating in the production, export and domestic sales of sunflower oil, crop production, export of grain crops, provision of services for storage and transshipment of grain at elevators and port terminals.