"Kernel" is switching to processing other oil crops due to a shortage of sunflower seeds; the competition for raw materials has reduced profitability.
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"Kernel" is switching to processing other oil crops due to a shortage of sunflower seeds; the competition for raw materials has reduced profitability.

Due to the shortage of sunflower seeds on the market, the company "Kernel" has switched to processing other crops. One of the plants had to close down due to a lack of raw materials.

The processing volume has increased by 20% thanks to the new plant. Oil sales have decreased by 31%, and profitability has fallen due to competition.

A harvest of 12.2 million tons is forecasted.

27 January 2025 27 January 2025

Due to the limited supply of sunflower seeds in the Ukrainian market, three plants of "Kernel," the leading producer of sunflower oil in the country, made a decision at the end of last year to switch to processing other types of oilseeds. According to the company's report, one of the plants was forced to completely cease operations in January of this year due to a lack of raw materials.

Meanwhile, from October to December 2024, "Kernel" processed 973 thousand tons of oilseeds, which is 20% more than in the same period of the previous year. The company was able to achieve this growth due to the launch of a new oilseed processing plant in Western Ukraine in February of last year. During the reporting period, 93 thousand tons of soybeans and 14 thousand tons of rapeseed were processed at the MEZ in the Khmelnytsky region.

The report notes that processing volumes in October-December 2024 increased by 42% compared to the previous quarter when regular monthly maintenance was carried out.

Sales of edible oil in the first half of the 2024/25 season decreased by 31% compared to the previous period, amounting to 269 thousand tons, including 18 thousand tons of bottled sunflower oil.

The EBITDA segment profitability decreased to $136/ton compared to $171/ton in the 1st quarter of 2024 due to intensified competition for the limited raw material supply in the Ukrainian market. As a result, the EBITDA segment amounted to $37 million, which is 37% less than in the same period last year.

"Taking into account the completion of the sunflower harvest, we forecast a crop of 12.2 million tons for the new season. This relatively small harvest, combined with expanded capabilities for processing oilseeds, continues to have a significant impact on reducing margins in processing," noted the company.

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