KSG Agro published financial results for the first quarter of 2012 indicating outstanding results. The Group’s revenues increased by whooping 519% at the level of USD 4.6 M compared to USD 0.7 K for the same period of 2011. Operating profit increased by 62% to USD 2.4 M Net profit increased by 65% to the level of USD 1.8 M compared to USD 1.1 M during the Q1 2011. According to company’s management significant increase in sales is attributed to successful implementation of the diversification strategy and increase of share of non-farming segments sales in total revenues.
The Group plans to achieve such further operational results in 2012: land bank under control of 110 k hectares by the end of the year (including 80 k ha of harvested land), storage capacities of 76 k tons and total grain harvest of 228 k tons. These operational results are expected to lead to the following financial performance in 2012: Revenue, EBITDA and net income of USD 66.7 M, USD 42.3 M and USD 31.8 M, respectively. Purchase of more than 20 k ha is already at the negotiations stage. Starting from 2012, the management plans to expand the share of cultivated land under wheat, barley and corn in order to diversify revenues and increase land usage efficiency.

In line with diversification strategy of the Group, forecasted sales of fuel agro-pellet and pig breeding segments, in aggregate, are expected to reach 30% of total Group’s revenue, by 2015. Diversification of operations also helps to maintain liquidity at sufficient level through the whole financial year, consequently contributes to solving problems of seasonal cash flow, which is attributable to companies of agricultural sector.
KSG Agro plans to strengthen dominant position in the Central Ukrainian regions, which are rich in black soils and have favorable geographic location due to proximity to Dnipro River, main railways and Black Sea ports. More than threefold increase of land bank under control from current 61.0 k to 200 k hectares by the end of 2015 is expected.

AgroInvest comment: KSG Agro has been the most active company during 2012 in terms of number of external sources of funding, attracting USD 43.25 M from four different external sources. In case company remains active in terms of effective investments in company’s activities, we expect further improvement of company’s financial results.

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