Ukraine: Avangardco reports H1 revenue increase of 26.6%
Avangardco, a leading producer of eggs and egg products in the Ukraine, has released its financial results for the first half of 2012.
Financial highlights
- Revenue increased by 26.6% year-on-year to US$283.6 million (H1 2011: US$223.9 million).
- EBITDA increased by 33.9% year-on-year and reached US$122.1 million (H1 2011: US$91.2 million), with EBITDA margin increasing up to 43.1% (H1 2011: 40.7%).
- Operating profit increased by 36.1% year-on-year to US$114.5 million (H1 2011: US$84.1 million).
- Net profit for the year grew by 45.6% year-on-year to US$97.6 million (H1 2011: US$67.0 million), with profit margin of 34.4% (H1 2011: 29.9%).
Operational highlights
- Total flock increased by 6.2% year-on-year to 25.9 million (H1 2011: 24.4 million). The number of laying hens increased by 9.6% year-on-year to 20.6 million (H1 2011: 18.8 million).
- Production of shell eggs increased by 8.0% to 3.106 billion units (H1 2011: 2.875 billion units).
- Sales of shell eggs to external clients increased by 12.8% year-on-year to 2.412 billion units (H1 2011: 2.139 billion units).
- The share of shell egg sales through modern retail chains increased to 31% of total sales to external customers (H1 2011: 30%).
- The average egg price increased by 26.4% year-on-year and amounted to UAH 0.67 excluding VAT (H1 2011: UAH 0.53 excluding VAT).
- The production of dry egg products increased by 22.4% year-on-year reaching 7.1 thousand tonnes (H1 2011: 5.8 thousand tonnes), or 541 million eggs in egg equivalent (H1 2011: 534 million eggs).
- The average price of dry egg products increased by 9.1% year-on-year to US$7.54/kg (H1 2011: US$6.91/kg).
In H1 2012 export of shell eggs and egg products in egg equivalent amounted to 342 million eggs.
Shell Egg Segment
During the first half of 2012 the Company increased its shell eggs production volume by 8.0% to 3.106 billion eggs year-on-year (H1 2011: 2.875 billion) mostly as a result of the growth in the population of laying hens in the first half of 2012. As of June 30, 2012, the Company’s flock of laying hens was 20.6 million heads (H1 2011: 18.8 million heads).
Sales to external customers increased by 12.8% year on year as the Company developed its existing sales markets and reached new ones. The share of shell egg sales through modern retail chains (supermarkets) reached 31% of total sales to third parties (H1 2011: 30%).
The first half of 2012 results have shown robust growth in sales of “Kvochka” branded eggs (“Kvochka”, “Organic eggs”, “Kvochka Domashnyaya”). Furthermore, the sales of branded shell eggs in the first half of 2012 have increased by 7 times year on year.
In the first half of 2012, the Company has significantly increased its export volumes of shell eggs by 2347.6% to 154.2 million eggs (H1 2011: 6.3 million eggs) following increase of demand and diversification of the Company’s export markets. The key export destination of the Company was Iraq. In addition to its core target markets the Company has started exporting shell eggs to new markets such as Mauritania, Republic of Djibouti, Gambia, Angola and Libya.
In the first half of 2012, the average egg price increased by 26.4% year on year as a result of the overall growth of shell egg prices in Ukraine, significant growth in export volumes of the Company and increases in sales to supermarkets. In the second half of 2012, the Company expects a further increase in the average egg price.
Revenues from sales of eggs increased by 42.5% to US$ 201.506 million (H1 2011: US$ 141.423 million), representing 71.1% of the Company’s revenues. The Company’s revenues from the export of shell eggs have increased by 3501.3% to US$ 19.915 million (H1 2011: US$ 0.553 million).
Egg Products Segment
In the first six months of 2012, the Company processed 541 million eggs (H1 2011: 534 million eggs) and produced 7.1 thousand tons of dry egg products (H1 2011: 5.8 thousand tonnes).
In the first half of 2012, exports of egg products amounted to about 188 million eggs in egg equivalent. In the first half of 2012 the main markets for export of dry egg products have become Jordan, Turkey, Egypt, South Korea and Pakistan. In the first half of 2012, the Company began to export egg products to new markets of Taiwan and Egypt.
The average sales price for dry egg products increased 9.1% year on year primarily due to the changes in product mix sold as well as the growth of prices for all kinds of egg products in the market.
Revenues from the sale of dry egg products amounted to US$ 35.803 million (H1 2011: US$ 34.808 million), representing 12.6% of the Company’s revenues. In the first half of 2012, revenues from the export of egg products increased by 59% and made US$ 15.793 million.
Investment Projects
The construction of two poultry complexes for egg production “Avis” and “Chornobaivske” in Khmelnytsky and Kherson regions is going according to schedule. At these complexes, the Company uses equipment from Offince Facco & CSpA, Big Dutchman International GmbH and Salmet International GmbH, the recognised leaders in the production of equipment for poultry farming.
Enriched cages used at the poultry farms meet the European Council Directive № 1999/74/EC on the protection of laying hens.
Avis: The development of the second stage of the site for the rearing young laying hens at the “Avis” poultry complex has been completed. Currently, the company is in the process of construction and assembly.
The construction of the second stage of the site for the laying hens is progressing according to schedule. The capacity of the facilities for the laying hens is expected to increase to 5 million heads when they are fully commissioned in the first quarter of 2013.
The actual utilisation of the sites corresponds to the operational plans of the company.
The construction of elevator with the capacity of about 60 thousand tonnes is complete.
Chornobaivske: At the end of the first half of 2012, the first stage of the site for the rearing of young laying hens was operating at full capacity.
LLC Imperovo Foods Egg Processing Plant: The first stage of the capacity expansion at LLC Imperovo Foods egg processing plant was completed. Currently the Company is working on doubling the capacity for processing eggs from 3 to 6 million units per day.
Activities for the second half of 2012
In the second half of 2012, the Company expects further growth in sales due to the high demand for eggs and egg products in Ukraine, as well as in the markets of the Middle East, Africa and Asia as a result of rapid economic development and the increase in income per capita in these regions. Part of the Company’s sales growth will be driven by reduced exports from the EU.
As part of the export strategy, the Company plans to increase the number of export markets to 38 countries by the end of this year from 21 at the end of the last year.
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