Ukraine egg producer Avangardco lays cracking results

What's Up: As the price of eggs from Europe surges, Avangardco, Ukraine's biggest producer of eggs, is cashing in on demand from the Middle East.

The biggest producer of eggs in Ukraine is cashing in as buyers in the Middle East, forced to shell out more for European Union products, switch suppliers eastwards.

Avangardco Investments, which listed on the London Stock Exchange in 2010, has seen its shares soar 77.1 per cent so far this year to US$11.76 each.

The company generated profits of $196.2 million last year, a 6.2 per cent increase on the previous year. Much of that growth came from the Middle East, which is Avangardco's biggest export market.

But the company's latest trading statement shows a substantial increase in sales during the first quarter, as a new EU directive scrambles the egg market.

Total exports of eggs increased to 110.8 million in the first quarter of this year, compared with 1.3 million during the same period a year earlier, the company said in its first-quarter trading statement.

The EU directive, which prescribes bigger cages and better conditions for battery hens, is granting significant export opportunities to the company, which is not located in the EU and does not have to comply with the regulation. With consumers deciding they do not want to shell out more for eggs, many firms are switching suppliers.

Avangardco has "indirectly benefited from the large price increases in the EU egg market following the enforcement of EU Directive 1999/74/EC on January 1, 2012", the company said. "The EU legislation, which provides for laying hens being kept in 'enriched' cages, has created significant distortions in the EU egg market, which is likely to remain for the rest of the year."

Avangardco expects to benefit from the decrease in EU countries' exports to the Middle East and Asia for the rest of the year, and has also targeted new markets including Mauritania and Libya.

Although Fitch Ratings, which rates the company "B", warns the firm's focus on exports may have put all its eggs in one basket.