OREANDA-NEWS. On 13 May 2009 was announced, that in 2008, ASTARTA expanded its business and demonstrated strong operational performance. Financial results influenced by currency translation difference following the Ukrainian hryvnia devaluation.

Geographical diversification into Western Ukraine, acquisition of the Narkevychi sugar plant and lease of additional 29 thousand hectares of agricultural land there.

Land bank increased to over 166 thousand hectares, all land under lease involved in agricultural operations.

Record-high sugar output made ASTARTA the largest sugar producer in Ukraine.

Sugar plants modernization resulted in a 15% cut in energy consumption. ASTARTA signed an agreement to sell the carbon credits within the framework of the Kyoto Protocol.

Crops production almost doubled y-o-y, with export crops sales reaching 25%.

As a result of the use of advanced agri-technologies and favorable weather conditions, yields per hectare for main crops grew by around 40%.

Key Financial Highlights

Consolidated revenues increased by 41% y-o-y to EUR123.4 million (EUR87.7 million for 2007) following record-high sales of sugar and agricultural produce

Gross profit increased 42% y-o-y to EUR34.6 million (EUR24.6 million for 2007). Gross margin remained at 28%

EBITDA remained at EUR31 million. EBITDA margin decreased to 25% from 35% a year before, as a result of impairment of business conditions in 4Q2008

Depreciation of the Ukrainian hryvnia against major currencies had a negative impact on the Group's financial results. Non-cash translation loss of EUR33.2 million on foreign currency received debt resulted in EUR 7.6 million of net loss vs. EUR 21.5 million of net profit in 2007. If disregarding these foreign currency losses, the Group's profit before tax in 2008 would have amounted to EUR 22.4 million.

PRODUCTION AND MARKETING RESULTS: POSITIVE

Production

In 2008, the Group harvested over 393 thousand tons of grains and oilseeds (96% up y-o-y), produced more than 33 thousand tons of milk (18% up y-o-y) and more than 1.5 million tons of sugar beet (65% up y-o-y).

The growth in crops production was achieved due to an increase in cultivated areas and to a boost of productivity: average yield of winter wheat in 2008 was 5.2 tons per hectare (up by 51% y-o-y), 3.9 tons per hectare for spring barley (up by 68% y-o-y) and 52 tons per hectare for sugar beet (up by 27% y-o-y).

With approximately 1.7 million tons of sugar beet processed and 235.6 thousand tons of sugar produced, ASTARTA became No. 1 national sugar producer and gained a 15% production share in the overall Ukrainian sugar output in 2008.

In 2008 about 84% (71% in the previous year) of sugar beet was provided to ASTARTA's plants by the Group's agri-companies. Mills modernization and implementation of the energy saving program contributed to a 15% cut of energy consumption per ton of sugar y-o-y. Average sugar yield per ton of beet improved from 12.85% in 2007 to 13.86% in 2008.

Revenues breakdown

In 2008, the breakdown of the Group's revenues slightly changed compared to 2007. On the back of more aggressive growth in sugar sales, their share grew from 56% to 57%, while a share of cattle farming (meat and milk sales) dropped from 8% to 7% in total. Share of revenues from crop sales remained stable at 24%.

Sugar sales

Sugar sales grew 40% y-o-y to EUR 81.7 million. Throughout the year, ASTARTA managed to keep a usual positive margin in its selling price over the market average, while substantially expanding the Group's market share and winning new big customers among confectionaries and drink producers.

Crops sales

Crops sales grew 39% y-o-y to EUR29.6 million. In the first half of 2008, the Group benefitted from the re-emerging export opportunities after lifting of export restrictions and high prices. However, in the second half of 2008, prices for agricultural crops in Ukraine and worldwide started to decline sharply. Facing a record-high crop harvest and responding to the global financial instability, prices continued their downward trend in autumn, reaching their lows in December to start upward correction only in January 2009.

Sales of Cattle Farming Produce

In 2008, ASTARTA increased its milk sales by 25% to EUR 9.1 million. With Ukrainian milk production declining and cattle herds shrinking, in 2008, average prices for raw milk in Ukraine continued their growth, gaining 24% by the year-end. This trend proves that cattle farming is an advantageous activity for the further development by the Group.

MANAGEMENT COMMENT ON 2008 RESULTS AND OUTLOOK FOR 2009

Viktor Ivanchyk, CEO of ASTARTA Holding N. V. said: "In 2008, ASTARTA managed not only to expand and diversify its business while acquiring new assets and land under lease, but substantially increased yields of all crops, as well as the efficiency, and volumes of sugar production. At the same time, in the fourth quarter we encountered worsening market conditions due to deteriorating macroeconomic climate in Ukraine. We immediately reacted to this situation, adjusting our financial, investment, marketing and operational policy to mitigate the negative impact on our business. However our financial results for the whole year were detrimentally affected, mostly by the currency translation loss following devaluation of the Ukrainian hryvnia. Responding to challenges of the financial crisis, we also introduced a rigid cost control, revised our investment plans, and increased export sales thus achieving steady positive cash flows to fully meet the Group's obligations to banks and suppliers. However, Ukrainian hryvnia devaluation and currency translation losses negatively influenced our financial results.

Management's primary task in the present situation is to further increase efficiency of our core businesses. To fully profit from the recent business expansion, we improve the structure of our Group, streamline management of operations and accounting of our sugar plants and agri-companies by structuring them into five large business based on our sugar plants. This reform will provide for better management of operations, and minimization of unnecessary transaction costs.

As for now, our markets are recovering. ASTARTA enters the new production season with optimized business structure and ability to  strengthen its position in all market segments."