OREANDA-NEWS. May 4, 2010. ASTARTA Holding N.V., a leading integrated agri- and sugar producer has published its Annual report for the year 2009.

Financial Highlights

Revenues

Upward price trends in the agri- and sugar markets in 2009 contributed to a 40% y-o-y increase in revenues in the Ukrainian hryvnia equivalent to UAH 1,355 mln. Due to the Ukrainian hryvnia depreciation against the Euro, revenue in the Euro equivalent marginally decreased by 5% y-o-y to EUR 117.7 mln.

Gross profit and cost of revenues

On the back of the management efforts to increase efficiency, the cost of revenues demonstrated a moderate growth by 17% in the Hryvnia equivalent to UAH 894 mln. In the Euro equivalent, the cost of revenues decreased by 19% to EUR 77,9 mln. The gross profit grew 76% in the Hryvnia equivalent to UAH 446.2 mln (10% in the Euro equivalent to EUR 38.1 mln). The gross margin rose to 33% compared to 26% in 2008.

Profit from operations (EBIT) and EBITDA

The profit from operations (EBIT) tripled in the Ukrainian hryvnia equivalent to UAH 457.5 mln and almost doubled in the Euro equivalent to EUR 40.4 mln. The EBIT margin more than doubled from 16% in 2008 to 34% in 2009. Such an increase in the profit from operations was a result of targeted management efforts, namely, the Group's restructuring aimed to increase efficiency and to cut transaction costs.

In 2009, the positive change in the fair value of biological assets was UAH 139.2 mln (UAH 1.6 mln in 2008) mostly due to a sharp increase in milk prices in the fourth quarter of 2009, as well as the growth of the Group's cattle headcount. The change in fair value of biological assets in crop production also reflected the increase in areas under winter crops, as well as higher prices for these crops compared to December 31, 2008.

EBITDA grew 154% in the Hryvnia equivalent to UAH 568.1 mln (62% in the Euro equivalent to EUR 50.1 mln). EBITDA margin grew to 43% vs. 25% in 2008.

Profit before tax and net profit

Profit before tax in 2009 constituted UAH 328.7 mln against loss before tax of UAH 116.5 mln in 2008. In the Euro equivalent, in 2009 profit before tax was EUR 29.3 mln.

In 2009, net profit constituted UAH 323.3 mln (EUR 28.9 mln) against net loss of UAH 89.2 mln (EUR 7.6 mln) in 2008. Net margin in 2009 reached 24%.

Operational Highlights

Revenues breakdown

In 2009, the breakdown of revenues just slightly changed compared to 2008. Due to strong sugar prices in 2009, the share of sugar sales grew from 57% to 60% of the total. The share of revenues from crop sales also grew from 24% to 25% mostly on a back of increasing volumes of sales. The share of revenues from cattle farming (meat and milk sales) dropped from 8% to 7% of the total as a result of low prices for milk during first three quarters of the year.

Sugar production and sales

In the season of 2009, ASTARTA's share in the total Ukrainian sugar production grew to 17.8%, consolidating its position of the largest sugar producer in Ukraine. The share of in-house grown sugar beet in the total volume of beet processed by the Group grew to 90% (84% a year earlier). At the same time, the total sugar output by ASTARTA decreased from 235.6 thousand tons in 2008 to 225.2 thousand tons due to less favorable weather conditions and lower application of fertilizers resulting in a decrease in beet productivity per hectare and respectively lower volumes of beet processed. The average sugar yield per ton of beet grown at ASTARTA's farms improved from 13.8% in 2008 to 14.8% in 2009, while the average Ukrainian figure was 13.5% (12.8% in 2008).

In 2009, ASTARTA reinforced its market position among large industrial sugar consumers and demonstrated a flexible marketing approach actively developing its B2B client base. Approximately 84% of sugar was sold to large Ukrainian and international beverage producers and confectionaries (around 63% in 2008).

Crop production and sales

In 2009, ASTARTA mainly focused on agri-production cost efficiency rather than a fast growth of this segment. In 2009, ASTARTA harvested 376 thousand tons of grains and oilseeds. A 4% y-o-y decrease in gross harvest of crops was caused by the same reasons as played for sugar beet. Similarly, the yield of basic grains and oilseeds by the Group's agricultural companies in most cases exceeded Ukrainian averages. In terms of volumes, in 2009 sales of the key five crops grew 27% compared to 2008. This increase was caused by the larger output in the season of 2008 and higher beginning stocks in 2009.

Production and sales of cattle farming produce

In 2009, ASTARTA continued to develop its cattle farming segment. The Group increased its milk production by 33% from 33 thousand tons to 44 thousand tons and milk sales by 29% from 32 thousand tons to 41 thousand tons respectively. Due to lower demand for industrial dairy products, average prices for milk in 2009 were down compared to 2008. Thus, despite increased volumes, sales of cattle farming produce accounted for 7% in 2009 (vs. 8% in 2008) worth of EUR 8.1 million (EUR 9.1 million in 2008).

Export sales

Total export sales in 2009 grew by 46% y-o-y to EUR 14.5 million (UAH 164 million) and constituted approximately 12% of the total sales (EUR 9.9 million or 8% of the total in 2008). The Group exported 38% of dry granulated pulp to foreign consumers as a high-quality animal feed. Molasses was mainly exported to EU-27 consumers (57%), with the rest 43% sold in Ukraine (distilleries and yeast producers). Crops were exported more actively than in 2008, resulting in EUR 10.8 million of export revenues (37% of the total of the category) compared to EUR 7.4 million in 2008. ASTARTA?s policy is to secure sufficient level of the export sales to cover in full the interest and principal part of debt received in foreign currencies with currency proceeds. This policy is well supported by increasing competitiveness of the Group's products on international markets.

MANAGEMENT COMMENT ON 2009 RESULTS AND OUTLOOK FOR 2010

Viktor Ivanchyk, CEO of ASTARTA Holding N. V. said: "During the last year, ASTARTA accomplished a number of significant structural and operational improvements. We optimized the Group's structure, reinforced efficient management of all production assets, and streamlined the decision-making process. On top of this, we continued to introduce advanced technologies into agricultural production and processing thus achieving better cost efficiency, energy saving and higher productivity. We also went on with expansion of modern storages and grain dryers, as well as modern cattle farming facilities. Successful loan portfolio restructuring accomplished in autumn 2009 also became an important factor for stable development of our business.

ASTARTA's significant financial, technological, and institutional potential provides a good basis for its further dynamic growth. In particular, in 2010 we plan to continue the organic development by integrating additional areas of land into existing regional business units. Increasing sales in all key segments, further enhancing of energy efficiency and productivity are also in our plans. The company has always been doing its best to meet the expectations of stakeholders and achieve its goals. Analyzing the results of 2009, we are satisfied that all objectives set for the management were met, and a reliable basis was created for the further Group's development and an increase in its value for shareholders".