Banvit Plans Bond Sale to Cut Forex Exposure, Chairman Says
Banvit Bandirma Vitaminli Yem Sanayii Ticaret AS (BANVT) is seeking to sell bonds as part of the Turkish poultry producer’s plan to trim short-term foreign currency debt after the lira’s slump this year.
Banvit plans to offer as much as 200 million liras ($104 million) of notes in various tranches, Chairman Omer Gorener said in a phone interview on July 17. The company had $88 million of dollar-denominated debt at the end of the second quarter, up 16 percent from the previous three months, while its euro-denominated liabilities fell 28 percent to 35 million euros ($46 million), according to data provided by Banvit.
“We have shortlisted two advisers for debt sales, which may start with a two-year tranche, followed by a three-year one,” Gorener said, without disclosing names of the advisers. “After the recent spike in the dollar, we’re observing the market. We first want to see how others do in bond sales.”
Banvit, which relies on exports for about 18 percent of sales, is taking steps to offset the lira’s 7 percent depreciation versus the dollar this year, the worst performance after South Africa’s rand among emerging-market currencies in Europe, Africa and the Middle East tracked by Bloomberg. The company, based in Bandirma, Balikesir in northwestern Turkey, is also pursuing a five-to-seven year loan to help extend the maturity of its liabilities, Gorener said.
The lira, which tumbled to a record low of 1.9740 a dollar on July 8, appreciated 0.3 percent to 1.9122 a dollar at 5:47 p.m. in Istanbul. The currency has weakened 6.7 percent against the dollar and the euro this year.
Banvit’s second-quarter results will show a “much better picture,” after it posted a loss of 4.5 million liras ($2.4 million) in the previous three-month period, according to Gorener. The company “may be able to return to profit” when it reports results in a few weeks, he said. Ekspres Invest and BGC Partners Inc. (BGCP) are both expecting Banvit to report a quarterly loss, according to data compiled by Bloomberg.
The poultry producer revised its 2013 sales-growth forecast upward to 1.7 billion liras, representing a 35 percent increase over 2012, Gorener said. Banvit won new customers after competitor Seker Pilic ve Yem Sanayi Ticaret AS halted production in January due to financial difficulties, he said.
Banvit attempted to acquire Seker’s assets before talks broke down in February, Gorener said, without giving details. The company now provides about 70 percent of poultry orders for retail chain Bim Birlesik Magazalar AS (BIMAS), up from 35 percent before Seker halted output, he said. Seker restarted output on June 30, according to a filing with Borsa İstanbul.
Banvit, which relies on poultry sales for 65 percent of revenue, also expects exports to grow 43 percent this year to $90 million, according to Gorener. The company produces about 480,000 chickens daily at three facilities, including one that started operations less than a month ago in Elazig, eastern Turkey, that will help boost exports. Banvit opened a unit in Dubai in November to increase sales to the six-nation Gulf Cooperation Council, which includes Saudi Arabia, where the company sent its first shipment this month.
“This year we target sending 5,000 tons to the Gulf region,” Gorener said. “Iraq is our biggest export market, with a share of 60 percent in all foreign sales, but we’re working to diversify.”
Gorener expects the Islamic holy month of Ramadan, which started July 9 in Turkey, to boost earnings this quarter as wholesale poultry prices increased to about 5.25 liras a kilogram from about 4.9 liras in June. Muslims break day-long fasts with communal meals at sunset during Ramadan, with food prices typically rising due to higher spending.
Banvit shares fell 0.6 percent to 3.52 liras at the close today, their lowest since July 12. The stock has declined 8.8 percent this year, compared with a retreat of 3.1 percent for the Borsa Istanbul National 100 index. Four analysts have a buy recommendation on the stock, while two recommend holding it, according to data compiled by Bloomberg.
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