Thursday, July 24, 2014

Kernel operating report Q4 2014


Kernel, operating report, Q4, 2014, front page

One of the few companies that I like but that is also having a tough time. The share price has once again dropped down to levels close to what it was down to when Russia stepped into Ukraine and most likely the drop is also based on this however there are other concerns that should not be forgotten...


The complete Kernel operating report for Q4 2014 can be found on this link. They keep claiming in their reports that their business have still not been influences by the crisis... I wonder a bit how long it will remain like that.

Below shows the fourth quarter volumes that Kernel was dealing with and there are some lifting news but I am uncertain how much impact it will have. But grain sales were less so not good. The bulk oil sales have slightly improved and that is good. Bottled is far less and that is seriously bad due to the high margins there. What I like to see here is that the crush tons of sunflower seeds have dramatically increased due to excellent harvest and this could potentially mean good news for both bulk as well as bottled oil but what concerns me is that I do not ever remembering them claiming last year that their bottled oil production or bulk for that matter was running on some dramatically decreased capacity so I do not know what this will lead to in the end. It is good that the terminal keep increasing their volumes but finance wise it means little to nothing.

Kernel, Q4, 2014, volumes

When we look at what matters more... the full year... then we see good increase in grains, decreased bulk, decreased bottled, due to the strong Q4 the crushed remained the same. The export increased also by a nice %-age. So if they will only manage to sort out the oil part then Kernel will definitely stand strong on both their feet again.

Kernel, full year, 2014, operating, volumes

Another bad news is the commodity prices as can bee seen below and almost everything has dropped by 20% that means a lot in the agricultural business and I hope that we will start to see an increase in the coming years but that is just wishes and based on nothing else.

World, prices, commodity, full year 2014

Conclusion: Kernel is still having a tough time due to crisis in Ukraine, due to commodity prices and due to lowered sales of their sunflower oil. I will stay with my shares and even though it is trading at a nice value I consider my position large enough and I will not increase my holding. For any person to step in as a fresh investor I would advice against it until Kernel and Ukraine shows more stability. For the last analysis please the analysis of Kernel 2013.
 

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