2 Jun 2023 09:33

Ukraine's KSG Agro posts loss in 2022, sees EBITDA fall 80%

MOSCOW. June 2 (Interfax) - KSG Agro closed 2022 with a net loss of $1.68 million compared to a net profit of $17.71 million in 2021, Ukrainian media reported, citing the Ukrainian agribusiness group's financial statement.

The company's EBITDA fell more than 80% to $1.79 million.

"The disruption of traditional logistics, export restrictions under the grain corridor, the growth of expenditures on personnel, security and energy autonomy - one can recount many negative factors of the new realities. So, of course, the results of 2022 cannot be compared with the previous year, which had record results besides in terms of the harvest," KSG Agro chairman and majority shareholder Sergei Kasyanov was quoted as saying in a company press release.

KSG Agro reported revenue down by about 52% to $16.2 million. Gross profit tumbled 70% to $3.18 million and operating profit plunged 95% to $0.44 million.

The company's exchange rate losses jumped 360% to $2.63 million. However, net debt grew by only 1.9% to $47.46 million and free cash flow totaled $0.27 million at the end of 2022.

The group also disposed of inactive subsidiary Khlebna Liga LLC in December 2022, taking a loss of $10.27 million.

"Despite the formal losses, the agricultural holding ensured stable operations in 2022. Thanks to the vertical integration of the business structure, we did not increase the debt burden and expanded sales of pigs, supplying 80% in our home regions of Dnepropetrovsk and entering the markets of Zaporozhya and Kharkov, where pig producers wound down operations," Kasyanov said.

The company said its board is working on a new development strategy to expand the group's operations in the European Union with the aim of having a large share of group assets and revenue in the EU within three to five years. This could be achieved through mergers and acquisitions, and internal and external financing, including new issues of shares.

"The board of directors does not plan to sell the group's existing assets in Ukraine. On the contrary, a new strategy has taken center stage - expansion and investment, thus reducing potential risks of investment only in Ukraine and easing the negative impact that the current macroeconomic situation in the country is having on the group's business," the company said.

The group's pig herd shrank by 3.3% to 42,260 head last year.

The company's revenue from crop farming fell to $4.5 million from $8.3 million a year earlier.

In December 2022, KSG Agro reached an agreement with its main bank creditor, Tascombank, on new lending terms as of the first quarter of 2023 that better reflect the group's financing needs in the current conditions, the company said. The overall credit limit for Tascombank loans remains UAH450 million, the interest rate on tranches in hryvnia is 25% with partial compensation of the rate under government programs, and the interest rate on tranches in U.S. dollars and euros is 9%.

Under the new terms, most of the principal debt is supposed to be paid in December 2025, while under the previous terms the company was supposed to pay $9.57 million by the end of 2023.

The company repaid $7.08 million of existing Tascombank loans in the first quarter of 2023 and received $6.03 million in new tranches under the new terms.

In addition, the duration of the $15.5 million loan of Kasyanov's Panama-based Olbis Investments S.A., which owns 57.96% of KSG Agro, has been extended until 2036, the report said.

"Based on management's five-year financial forecasts, it is expected that the group will generate sufficient profit in future in order to ensure the growth of total capital to a positive figure in the long term. In addition, when the economy begins to recover it is expected that the fair value of the group's assets will also naturally increase. Until then, the group depends on constant external financing," the company said.

KSG Agro is one of Ukraine's top five pig farmers and also produces, stores, processes and sells grains and oil crops. The group has about 21,000 hectares of land in Ukraine.

The official exchange rate was UAH36.57/$1 on June 1.