Agriculture

Sintal Agriculture [SNPS GR] announced the completion of its 2008/09 harvesting campaign, with a total harvest of 323 thsd metric tons from an area of 82 thsd ha. Sintal’s 2008/09 principal crop yields (wheat, barley and corn) constituted 4.7, 3.7 and 6.1 metric tons per ha, respectively. This marks an improvement of 2-9% compared to last year’s harvest. Nevertheless, the achieved wheat and barley yields are 45% and 50% higher than the Ukrainian average, respectively. The soybean yield was in line with last year’s results. The sunflower yield was depressed by 36% due to adverse weather conditions, compared to last year’s yield of 1.6 metric tons per ha.

The Fitch international rating agency has confirmed the long-term credit rating in foreign currency of Myronivsky Hliboproduct [MHPC LI] at the level of B -. The rating forecast is negative.

Landkom International [LKI LN], a major Ukrainian oilseeds and grain producer, has completed its autumn sowing campaign. It has announced a YoY reduction in the area under winter crops by 7 thsd ha to 24 thsd ha. However, the Company plans to shift more towards planting spring crops. As a result, the harvested area should ultimately increase to 34 thsd ha, which is 17% more than harvested in the previous season. At present, Landkom has already prepared 10 thsd ha for spring sowing. Among the winter crops sown, winter rapeseed is predominant at 16.5 thsd ha, while winter wheat has been sown on 5.5 thsd ha.

According to A. Zhemoyda, the Deputy President of the Agrarian Chamber of Ukraine, the bill "On the State Budget of Ukraine for 2010" does not meet the needs of Ukrainian farmers. According to the 2010 budget, funding in 1Q2010 should amount to only 1/12 of the overall funding witnessed in 1Q2009, which is not going over well with Ukraine’s farmers.

Today, at the General Meeting of Landkom International [LKI LN], shareholders approved the issuance of 195 mln ordinary shares at a price of 5 pence per share. This initiative was taken in order to attract an additional GBP 9.75 mln (about USD 16 mln) in financing. The actual issuance will be made tomorrow, November 26. The funds raised, which equal USD 15 mln excluding the costs of making the issuance, should go towards replenishing the Company’s working capital for the purpose of carrying out autumn and spring field work.

After a successful harvest in 2009, it is expected that Ukraine will gather 15-20% less grain next year. The key factors leading to this include complications of the autumn field works due to unfavorable weather conditions and lack of funding for Ukrainian farmers for fertilizing. The ammonium nitrate price seasonally jumped in late summer to exceed 1900 UAH per metric ton. As a result, farmers underfertilized at least 250 thsd metric tons of ammonium nitrate during the autumn field campaign. Farmers have also manured less than half of what is actually required in terms of complex fertilizers. Traders note that they haven’t seen such a drop in demand since the early 2000s.

Myronivsky Hliboproduct [MHPC LI], a major Ukrainian poultry meat producer, finished 3Q2009 with a net profit of USD 13 mln, which is 5.3 times lower than the USD 69 mln (UAH 103 mln) posted in 3Q2008. The Company’s revenues declined by 22% YoY in 3Q2009 in dollar terms, or by USD 56 mln, to USD 198 mln. Its EBITDA, in UAH, increased by 37% YoY to UAH 547 mln (vs. UAH 399 mln in 3Q2008). However, in USD, EBITDA decreased by 15% YoY to USD 70 mln (vs. USD 82 mln in 3Q2008).

As of November 18, importers’ claims for raw cane sugar imports to Ukraine reached the 100% mark of the quota set by the World Trade Organization. The quota level is currently 263.9 thsd metric tons. The largest share of the total amount of imports will come from Brazil (73.6%). The claims were filed by Ukraine’s major sugar producers; namely, by the Ukrros Sugar Union Ukrros, Ukrprominvest, Rise-Sugar, and the Dakor Agro Holding.

The Dakor Agro Holding, a major Ukrainian agricultural company, has announced that it plans to increase its net profit by 5.5 times, to UAH 648.5 mln, in 2011 compared with 2008. In that year, its net profit stood at UAH 117.2 mln. The net revenue for 2010 is expected to reach UAH 1.192 bln while, in 2011, it is expected to reach UAH 1,824 bln. 2009 revenues should fall to UAH 660.9 mln, which is 7.8% less than in 2008. This drop is due mainly to adverse weather conditions this year, which resulted in declining yields for the main crops.

Agroton, a major Ukrainian agricultural holding, reported on the planned IPO of its shares on the Warsaw Stock Exchange in May-June 2010. The Company has not yet revealed the number of shares that will be placed and the expected amount of funds to be raised. Earlier in November, the Company conducted a private placement of 25% of the Company's shares on the Frankfurt Stock Exchange, as a result of which USD 42 mln was raised. Thus, the Company's capitalization was estimated at USD 168 mln.