Kernel sees net profit fall by 44% in FY2024

Kernel, one of the largest Ukrainian agricultural holdings, received $168 million in net profit in the 2024 financial year (FY, July 2023-June 2024), which is 44% worse than the 2023 FY figure, the company said in its annual report on Monday evening.

"In terms of financial performance, the group's EBITDA in the 2024 financial year decreased by 30% compared to the previous year and amounted to $381 million, mainly due to the impairment of oilseed processing plants, port facilities and other assets by $229 million, which reflects the expected decline in productivity in the future and increased risks," said chairman of the board of directors and majority shareholder Andriy Verevsky.

It is indicated that after the adjustment, the basic indicators remained relatively stable: profitability decreased due to low prices for grain and vegetable oil, but this was partially offset by an increase in sales volumes due to our investments in export infrastructure.

"Foreign exchange losses of $97 million, caused by the depreciation of the Ukrainian hryvnia against the U.S. dollar, resulted in total consolidated income attributable to shareholders of the company amounting to $63 million, which is 7% higher than a year earlier," Kernel noted.

According to the report, the board of directors proposes zero dividends for the 2024 financial year.

The agroholding's revenue for the past financial year increased by 4%, to $3.581 billion, net cash flow from operating activities decreased by 34%, to $472 million, and capital investments increased by 57%, to $158.8 million.

It is also noted that due to the reduction in net debt from $313 million to $34 million, the net debt/EBITDA ratio improved from 1.1x to 0.7x

"The new season, like the three previous ones, will be largely determined by geopolitics and war risks, which will have a significant impact on Kernel: our business still largely depends on the Black Sea as the main export channel. Any disruptions in the operation of this route can seriously affect our operations, which we observed during some periods of 2022-2024," Verevsky said, speaking about the forecast for 2025FY.

According to him, although the company has developed alternative export options, they are not a sufficient substitute if this risk is realized.