Release Date: November 22, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- ASTARTA Holding NV (WAR:AST, Financial) reported a stable EBITDA margin of 30%, supported by strong development in biological assets.
- Operating cash flows increased by almost three-quarters to EUR136 million, allowing continued investments in agriculture and sugar making.
- The company is building a new silo for sugar preservation, enhancing quality for premium export markets.
- Soybean processing maintained a steady margin with a gross margin of 33% and an EBITDA margin nearly 30%, despite lower prices.
- Cattle farming is growing, with increased milk production and favorable pricing due to market consolidation.
Negative Points
- Soybean processing revenues declined due to lower prices for soybean products.
- Weather conditions negatively impacted crop yields, with average yields down by 15% to 25% for corn, sunflower seeds, and soybeans.
- Sugar production faced a challenging pricing environment, with gross margin contracting from 29% to 24% and EBITDA margin halved compared to last year.
- The decline in local sugar prices over recent months has affected profitability, with a 20% drop compared to last year.
- Electricity supply issues in Ukraine pose a risk to production facilities, although mitigated by backup systems and renewable energy initiatives.
Q & A Highlights
Q: How much sugar can Astarta export to the EU from Ukraine, and what is the company's share?
A: Viacheslav Chuk, Executive Director, Commercial Director, explained that Ukrainian producers can export up to 100,000 tonnes of sugar to the EU until June 2025. Astarta, being the largest exporter, expects to export according to its production share, which is around 25%.
Q: Can you comment on the lower cost of sugar production in the third quarter and its sustainability into 2025?
A: The company attributes lower costs to reduced exports and a mix of old and new sugar production. They have managed to lower costs on raw materials, sugar beet, and gas prices, suggesting a blended cost reduction from two seasons.
Q: What are the expectations for local sugar prices, and are exports to non-EU destinations profitable?
A: Viacheslav Chuk noted that sugar prices typically drop during high production seasons but stabilize post-campaign. Exporting to other markets remains profitable due to favorable fluctuations in the London sugar market.
Q: How is Astarta preparing for the EU's Carbon Border Adjustment Mechanism (CBAM)?
A: The company is not directly affected by CBAM as it does not cover agriculture and food processing. However, Astarta focuses on decarbonization, with sugar plants included in the MRV project, and anticipates potential economic impacts if Ukraine implements an emission trading system.
Q: What is the status and future potential of the agri-chain tool?
A: The agri-chain tool is an in-house software for precision farming and regenerative agriculture. It covers all stages of agricultural production and is used by other producers in Ukraine under licensing agreements, indicating its recognition as a primary IT agri-management system.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
