Saturday 25 January 2014

Kernel operating report H1 2014

Kernel, Operating Report, H1, 2014, Q2

Kernel once again arrived with an operating report and this time it was for the first half year of their 2014. On the stock market nothing much happened due to this report and well... I guess that I am a little bit more concerned than the market. The report from where all the details have been taken can be found here.

In the table below we can see the volumes and tonnes that they have been dealing with during the last half year.

What we can see from this is that the grain has been doing really well! Their strategy of stepping into grains is paying off big time and they have increased it by almost 40% from 2013. Their silos and storage are also profiting from that the Russian grain is going over their harbour and infrastructure which is why the volumes there have also improved significantly. A good news was that they said that their crushing machines for the sunflower oil has in principle been running at full capacity.

Still... the rest of the things are not so uplifting. Bulk oil is dramatically down as is their sunflower bottle brands, even the crushed seeds are down which indicates that Q1 in that sense was very bad. This was however not my biggest concern. My biggest concern are the world prices for commodities.

Kernel, commodity, prices, H1, 2014, Q2

Because as can be seen in the table above they are dropping like stones and are down by 20 to 30%. That is a lot! So my hopes still lies in their silos and that they manage to keep their grains slightly longer for prices to go up again.

Conclusion: Due to the dropping world market prices the earnings will probably also decrease for Kernel. For the year and the earnings they will manage to get this does indeed concern me but in the long run not at all and all the fundamentals are still in place which means that I remain as a shareholder in this great company.

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