Hunt for Ukraine farm deals proves sector's appeal
2011-04-28 17:24:03
The appetite for deals in Ukrainian agriculture is a measure of the sector's appeal, Astarta said, singling out the country's sugar and dairy industries as particularly attractive.
The sugar-to-grains group, which with well over 200,000 hectares under cultivation is one of Ukraine's biggest agricultural operators, welcomed as "positive moves" a series of deals in the sector, most recently Kernel's unveiling last month of plans to buy farm Ukrros.
Astarta itself made a string of smaller investments in 2010, and has this year has acquired two sugar plants, besides unveiling an operational tie-up with France's Danone.
"Consolidation is in progress," Viktor Ivanchyk, the Astarta chief executive, said.
"The company views this as evidence of a high long-term attractiveness of this sector in Ukraine."
'Strong long-term fundamentals'
Other groups revealing an appetite for farm-industry deals include poultry group Agroton and dairy producer Milkiland, while Mriya Agro, which itself farms more than 200,000 hectares, has raised $250m for expansion plans deemed "aggressive" by Fitch Ratings, including potentially in sugar.
Astarta named the sugar sector as particularly attractive, given forecasts that Ukraine's confectionery industry, a big user, will expand by 3-5% a year, following growth of 3.5% in 2010.
Annual average consumption rates of confectionery in Ukraine are, at 15-17kg per had, considerably lower than the 10-25kg per head in the European Union, as they are for soft drinks, at 38 litres compared with 90 litres.
"This [soft drinks] industry in Ukraine has substantial growth potential," Astarta said, adding that the sugar sector had "strong long-term fundamentals".
Already, the number of beet producers was expanding, cutting from 18% to 13% Astarta's share of national output, although the group retained top rank, ahead of Ukrprominvest, Ukrros and fourth-placed Mriya.
Dairy rationale
In dairy, a long-term decline in domestic milk output, especially by the household operations which account for the bulk of production, presented an opportunity for industrial-scale users to fill the gap.
"The management believes that efficient industrial raw milk production based on vertical integration and regional synergy has a strong long-term potential, and intends to continue developing this business segment within Astarta," the company said.
Astarta revealed its cattle division had raised revenues, mostly from milk sales, by 93% to E17.4m last year, with crop takings rising 21% to E40.4m.
Its sugar division, by far the group's biggest, lifted revenues by 93% to E159.5m, taking total sales to E219.3m, a rise of 71% year on year.
Earnings more than doubled, to E80.1m, equivalent to E3.20 a share.
Astarta shares closed down 1.3% at 77.00 zloty in Warsaw.