WOOD Flash – Kernel: 3Q20E preview – well on track to meet our 2020E EBITDA forecast (due on 29 May)
Kernel is due to report its 3Q20E results on 29 May, before the market opens. Based on the already reported volumes, we expect a USD 900m (+12% yoy) top line; while we forecast the EBITDA (ex.IFRS 16) to reach USD 85m (+53% yoy), driven mainly by the expansion of the profit in the infrastructure and trading segment (the launch of the new export terminal). We also expect the profit to grow yoy in other segments. Consequently, we see the EBIT landing at USD 63m (+75% yoy) and the bottom line at USD 13m. Finally, we do not exclude that the 3Q20E bottom line may be affected by a one-off non-cash event, related to the sale of the 50% stake in the Taman terminal in March. Kernel sold the stake for EUR 61m, paid in cash. We note that Kernel has not been involved in grain marketing operations in Russia since 2017, assigning its transshipment quota in the Taman terminal to a third party. In FY19, the company received a fee of USD 8m for this.Kernel Holding is a holding company. Co.'s is a diversified agribusiness engaged in the production and sale of bottled sunflower oil (sold under brand names Schedry Dar, Stozhar and Chumak Zolota), the production and subsequent export of bulk sunflower oil and meal, the wholesale trade of grain (mainly wheat, barley and corn), farming, and the provision of logistics and transshipment services n the ports of Ilyichevsk, Taman and Mykolaiv. The majority of Co.'s manufacturing facilities are primarily based in Ukraine and Russia. In addition, Co. is a private provider of inland silo services in Ukraine.
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