Kernel's EBITDA turned out to be 4.4% higher than expected — Concorde Capital

Kernel's EBITDA in 9MFY18 turned out to be 4.4% higher than analysts' expectations.

"We thought the key drivers would be its farming and oil segments. Instead, they had depressing results that were offset by positive results in grain trading, where EBITDA was USD 14.4/t in 3Q18 vs. USD 5.0/t year ago," investment analyst at Concorde Capital Andrew Perederey comments.

According to him, such impressive improvement was driven by Kernel's new subsidiary Avere Commodities SA, a Swiss-based trading company (in which it has a 60% stake) that has the ability to trade financial instruments (including futures).

"It is very disappointing that Kernel shifted away from its main operating segments of sunflower oil production and farming — where it implemented its main CapEx programs and which contributed stable cash inflows to unstable operations with futures. Such operations could make Kernel’s P&L more volatile," Andrew Perederey adds.

Previously it was reported that Kernel's net profit for 9M FY2018 had decreased 73.6 percent to USD 50.7 mln. The company's net loss for Q3 FY2018 reached USD 39.1 mln vs USD 32.9 mln of net profit for Q3 FY2017. Over 9M FY2018, EBITDA decreased 30.7 percent to USD 196.2 mln.