According to the official statement released by the company on its official website, Kernel has divested its oilseed crushing plant located in Nevinnomyssk in the Stavropol region of the Russian Federation for USD 10 million on a cash-free, debt-free basis. The plant has an installed crushing capacity of 100 000 tons of sunflower seeds annually.

Alex Morgun, financial analyst of UkrAgroConsult noted, that Kernel reported lower net income level for 2013 financial year (which ended June 30, 2013) at the level of USD 120.7 million, which constituted a 38.5% decline compared to the level of 2012. Later same year, company published Q1 2014 (July-September 2013) interim report, where net loss constituted USD -31.9 million and severe liquidity deficit: company reported USD 5 million cash at the end of the period, compared to USD 50.8 million over the same period in previous year. Operational results for the Q2 2014 (October-December 2013) indicated further drop of oilseed sales as well as bottled oil sales, with only grain sales growing by 22.5% compared to the same period of the previous year.

Data, presented above, hints towards the fact that funds attracted from sale of crushing plant in Russia will be used for financing company’s working capital and debt. Lower demand for company’s products and simultaneous drop in prices while increase in operational and finance costs were the main factors that lead to the situation company currently finds itself in. Company’s share price is also hitting its 4-year low at PLN 37.01 per share.

In case you are interested in state of agrarian sector within CIS region, please follow the link below to read UkrAgroConsult monthly report “Agrarian Business in CIS region” for January 2014 (featuring Ukraine). First issue is free of charge. You can subscribe to the report to receive it on a monthly basis.

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