AvangardCo net losses narrow

AvangardCo IPL - the largest producer of shell eggs and dry egg products in Ukraine - reports a net loss of $38.8m for the nine months to the end of September, down from $150.5m last time.

Consolidated revenue totalled US$111.1m - a decrease of 37% YoY (9M 2015: US$176.5m).

Export sales revenue amounted to US$48.1m, or 43% of the company's consolidated revenue (9M 2015: US$71.2 mln or 40% of the company's consolidated revenue).

Gross profits pf US$3.2, were 75% down YoY (9M 2015: US$12.9 mln). Gross margin at 3% (9M 2015: 7%).

Chief executive Nataliya Vasylyuk said: "In 9M 2016, the Company saw some operational improvements driven by the gradual recovery of the Ukrainian economy amid slowing rates of both inflation and the devaluation of the Ukrainian Hryvnia, as well as a slight decrease in tensions in Eastern Ukraine.

"Notwithstanding this, low purchasing power of local customers continues to be the main negative factor affecting our profitability and hindering the Company's stabilisation.

"At the same time, low household demand limits us in shifting increased production costs (16% growth YoY) to local customers by raising prices or increasing sales volumes. The Company's profitability was also negatively impacted by the revised special VAT regime for agricultural producers.

"The sales price of eggs in Ukraine has resumed its growth since the end of September, following low sales prices in Q3. The latter resulted in the Company having to sell shell eggs at a price below cost, in turn negatively impacting overall financial performance in the nine month period. In Q3 we managed to reduce costs as much as possible in the current environment. Also, we have continued to purchase elements of feed at an average of up to 10% below the market price.

"Despite the ongoing challenging market conditions, particularly domestically, the Company remains a leading producer of shell eggs and egg products in Ukraine and Europe. More than 43% of Company revenue is now generated from exports in foreign currency, which will be a key area of focus for the months ahead. The Company's main goals remain the successful expansion into foreign markets, attraction of new partners, optimisation of production costs and restoration of the Company's profitability."