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Astarta conflicts with ISO on outlook for Ukraine sugar exports

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Astarta Holding diverged with the International Sugar Organization over prospects for Ukrainian sugar exports, seeing the country as capable of building on a bumper export performance in 2016-17.

The dairy-to-soybean crushing group, which is Ukraine's top sugar producer, said that Ukraine's sugar exports had topped 750,000 tonnes in 2016-17, "putting the country in second position, after the European Union, among top exporters of beet sugar globally".

And the strong volumes - which would be the largest since the 1990s, as Ukraine was amidst a shift away from the sugar output which represented a key export in Soviet times – looked placed to set a trend, encouraged by operational improvements and tie-ups.

"Ongoing industry consolidation, investments into modernisation of sugar plants, and advances in beet growing technologies support the idea that Ukraine could become a structural and sizable exporter of sugar to global markets for years to come," the group said.

'Strategy of export expansion'

Astarta Holding itself has fuelled Ukraine's export drive, reporting that it sold 57% of its sugar – equivalent to 127,000 tonnes – to foreign customers in the first half of calendar 2017.

That compares with exports of "almost" 20,000 tonnes for the same period of 2016.

Indeed, exports accounted for all the group's 58% growth, to 223,000 tonnes, in sales, with the data implying a decline in domestic volumes.

The company said it had "continued its strategy of export expansion", which has involved finding new markets following curbs on Russia's imports from Ukraine.

ISO outlook

However, the outlook contrasts with International Sugar Organization forecasts on Friday that Ukraine's sugar exports will fall back to 350,000 tonnes in 2017-18, on an October-to-September basis, from a 2016-17 figure it pegged at 685,000 tonnes.

The ISO forecast reflected expectations of a drop in Ukraine's sugar output to 1.85m tonnes in 2017-18, a drop of 16,000 tonnes year on year, plus a modest increase in domestic consumption.

And, with inventories reduced by the bumper 2016-17 export programme, the organisation forecasts a smaller drawdown in stocks next season.

Astarta Holding has raised its beet sowings by 5% this year, to more than 47,000 hectares, besides planning to boost buy-ins from farmers, under contract, of crop for processing.

VAT hit

The comments came as Astarta unveiled earnings of E72.57m for the January-to-June half, unchanged year on year.

Revenues jumped 69% to E250.3m, fuelled by an 80% surge to E108m in sugar takings, and a 130% jump in sales from the farming division, with the soybean processing and dairy segments showing smaller growth rates.

Indeed, Astarta, responsible for nearly one-quarter of Ukraine soymeal and soyoil output, flagged "mixed" markets for oilseed crushing.

However, costs rose too, with salaries near doubling to E1.76m, and transportation fees tripling to E8.96m.

The group also flagged a dent from the ending of a VAT rebate scheme for agricultural groups, with VAT refund tumbling to E69,000 for the period, from E20.0m for the first half of 2016.

Astarta shares, which are listed in Warsaw, stood 1.4% lower at 63.60 zloty in afternoon deals.

By Mike Verdin

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