Monday 21 April 2014

Kernel operating report Q3 2014

Kernel, Operation, reeport, Q3, 2014, front page

It has indeed been a difficult period for Kernel and the stock market has been hard on them due to the conflict with Russia. This caused the shares to drop far over 20% during the last quarter but besides from that how has the company actually been doing?

The full Kernel OP report Q3 2014 can be found here. There was however some more news published on their home page (please look here) and those were very good. Very good indeed! It seems as if there has been an agreement between the EU and the Ukraine which means that the EU import duty has been decreased and even cut in many cases especially when it comes to agricultural products. So no more duty on sunflower oil from Ukraine and previously it was 2.9% for unrefined and it was as high as 6.1% for the refined oil which is what Kernel is mainly producing. So indeed very good news for the future. For cereals that has also been reduced duty but since the revenue from that is so little for Kernel anyway it matter much less.

What we see below is that the grain sales has increased in volume with 100% from 2013 but then again... that was more or less when they decided to step into that market more seriously so they value looks much more impressive than what it is. What is more important is the sunflower oil has increased by 50%. The export is also up by 66% but it also does not mean too much since the earnings are very low.

sales, volumes, Q3, 2014

However, and this is bad news, the prices has been dropping significantly from last year as can be seen in the table below and -25% on the sunflower oil is really bad news since that is the bread and butter of Kernel.

Commodity, prices, Q3, 2014

As always I care very little of the quarters and therefore this overview of the running nine months are more of interest and it shows that grain are in total up over 50% but less good the sunflower oil is down by almost -18%. Also much less sunflowers has been crushed in their refineries.

Conclusion: Due to many reasons I think that 2014 which for Kernel only has three more months to run will not become the year of turning but I am looking very much forward to 2015. Decreased duty on their oil, hopefully the war-like situation with Russia will be solved and they will profit from this. As a shareholder I am looking forward to 2015 and I will stay with my shares since nothing has changed. For the analysis of Kernel 2013 please use this link. 

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