OREANDA-NEWS. On 19 May 2009 ASTARTA Holding N.V. published its financial results for the first quarter of 2009.

Key Financial Highlights

Consolidated revenues increased by 9% y-o-y to EUR 21.6 million (EUR 19.9 million in 1Q 2008)

Gross profit decreased y-o-y from EUR 5 million in 1Q 2008 to EUR 983 thousand. Gross margin suppressed by high cost of sales and lower than in 1Q 2008 prices for crops

Net profit amounted to EUR 891 thousand vs. EUR 5 million in 1Q 2008

EBITDA declined to EUR 3.8 million from EUR 8.6 million in 1Q 2008. EBITDA margin decreased to 18% from 43% in 1Q 2008

Cash flows provided by operating activities grew 18% y-o-y to EUR 3.8 million from EUR 3.2 million in 1Q 2008 (or 67% in the Ukrainian hryvnia equivalent).

Key Operational Highlights

Boosted sales of crops and sugar on the back of price recovery, and positive developments in sugar and grain markets following rather tough conditions in the fourth quarter of 2008

Increase of export sales of crops and start of sugar export

Spring sowing campaign finished in optimal timing. Total agri-cultivated land bank (sowed fields and fallow land) increased by around 10% y-o-y to 158 thousands ha

Winter crops and new sprouts are in good condition

Revenues

In the first quarter of 2009, revenues increased 9% (in EUR terms) compared with the first quarter of 2008 owing mainly to higher volumes of sales of main products and better pricing for sugar (+31% in the Ukrainian hryvnia equivalent). Sugar sales represented 58% of the total revenues, same as in the first quarter 2008. The share of revenues from crop sales grew from 17% to 22%. Revenues from cattle farming (meat and milk sales) fell from 11% to 8%.

Cost of Revenues and Gross Profit

Downturn in international crops prices and deteriorated economic situation in Ukraine negatively influenced financial results of the quarter. Lower than a year before crops prices and the Ukrainian hryvnia depreciation suppressed growth in revenues in EUR terms. At the same time, the cost of sales grew fast following an increase in the cost of production, as well as a substantial growth in the volumes of sales. The above drivers contributed to a decrease in the gross profit from EUR 5 million in 1Q 2008 to EUR 983 thousand in 1Q 2009 and a gross margin fall from 25% to 5% respectively. Taking into account positive developments in the Group's markets, in particular sharp increase in international and Ukrainian sugar prices, as well as management actions to cut the costs of production, the gross margin is expected to recover in the future periods.

Profit from Operations, Profit before Tax and Net Profit

Following suppressed gross profit, profit from operations was EUR 1.7 million vs. EUR 6.7 million in 1Q 2008. The operational margin was 8% in 1Q 2009 against 34% in 1Q 2008. Profit before tax was EUR 271 thousand in Q1 2009 vs. EUR 4.9 million in Q1 2008, and the net profit amounted for EUR 891 thousand vs. EUR 5 million respectively.

Sugar Sales

In the first quarter of 2009, revenue from sugar sales increased 10% compared with the first quarter of 2008 to EUR 12.8 million (57% in the Ukrainian hryvnia equivalent). In terms of volumes, sugar sales increased from 36.2 thousand tons in the first quarter 2008 to 41.8 thousand tons in the first quarter of 2009, or by c. 16%.

Crops Production and Sales

In March, ASTARTA's agri-companies started the spring sowing campaign. To date, ASTARTA has finished sowing of sugar beet on the area of 35 thousand ha and spring barley on 23.3 thousand ha. About 8 thousand ha have been sowed with the forage crops, 11.7 thousand ha with sunflower, 12 thousand ha with corn and 11 thousand ha with soybeans. The total area of agricultural land under cultivation (cropland and fallow land) increased in 2009 by around 10% to 158 thousand ha.

Revenues from crops sales grew 39% from EUR 3.3 million in Q1 2008 to EUR 4.7 million in Q1 2009 (or 99% in the Ukrainian hryvnia equivalent). In terms of volumes, sales of the key five crops grew from 21.4 thousand tons in the first quarter 2008 to 55.3 thousand tons in the first quarter of 2009, or by 158%.

Production and Sales of Farming Produce

In the first quarter of 2009, ASTARTA's farms produced 8.3 thousand tons of milk, of which 7.7 thousand tons were sold to dairy processors. The Group's revenues from sales of cattle farming produce grew 14% y-o-y in the Ukrainian hryvnia equivalent, but lost its growth in the Euro equivalent due to Hryvnia depreciation, thus falling from EUR 2.2 million to EUR 1,8 million to secure 8% of the total revenues.

Management comment on results of the first quarter of 2009 and current operations

Viktor Ivanchyk, CEO of ASTARTA Holding N. V. said: "The results of the first quarter of 2009 demonstrated that ASTARTA is adapting to the new economic situation and tough recessionary business conditions. The efforts made to improve the efficiency of the Group's operations have already given positive results.

The situation in the Group's markets is improving compared to the last quarter of 2008. The international sugar market shows a particularly high growth tempo, as the world sugar price jumped 30 per cent this year. The domestic sugar price in Ukraine has also increased following higher cost of production in the previous production season. Meanwhile, the Ukrainian sugar price is still below those in the EU and CIS countries.

It should be noted that the Group has successfully begun the new production season. In optimal timing, we have finished the spring sowing campaign with 10% y-o-y expansion of cultivated area. The condition of winter and spring crops, as well as sprouts of sugar beet are good, and let us be optimistic about the new harvest."