October 6, 2017 / 7:15 AM / a year ago

UPDATE 1-Ukraine drought to hit AgroGeneration crop production

* Farm operator expects sunseed yield losses from drought

* Total output may fall from 2016 despite good wheat crop

* Core H1 profits rise, firm sees grain price recovery (Adds detail)

PARIS, Oct 6 (Reuters) - Farm operator AgroGeneration said on Friday that summer drought in eastern Ukraine will affect its sunflower seed harvest and could push its overall production down this year despite a bumper wheat crop.

The Paris-listed firm, which farms just over 100,000 hectares in Ukraine, has observed a “significant” hit to yields of sunflower seed, or sunseed, already harvested in the east, Vice Chairman Pierre Danon told Reuters.

He declined to give a precise figure.

The company was waiting for harvesting of sunseed and other summer crops like maize to progress further west to assess its overall production prospects, he said, adding that maize should have suffered less than sunseed because it received more rain.

AgroGeneration produced about 390,000 tonnes of crops last year and said in a first-half results statement on Friday that the summer drought could affect its target of reaching a similar volume this year.

Ukraine is one of the world’s largest producers and exporters of cereals and oilseeds, and AgroGeneration is among the foreign investors to have targetted the country’s fertile farmland, despite political and economic upheaval.

The firm still had an objective to double the amount of hectares it farms in Ukraine but was being cautious about its pace of expansion due to difficulties in securing land leases, Danon said.

Earlier this year the company sold a 3,800 hectare farm near Kharkiv, partly motivated by a wish to be less weighted towards the east and its drier climate, and hopes to have replaced most of this area by the year-end through deals further west, Danon added.

Core profits were supported by a slight improvement in grain prices and Danon said AgroGeneration expected to benefit from a steady increase in prices in coming years following a downturn in grain markets since 2013.

An exchange rate effect linked to the farmland sale in the east weighed on its first-half results, with AgroGeneration reporting a 305,000 euro ($351,000) net loss compared with a 233,000 euro profit a year earlier.

But core earnings before interest, tax, depreciation and amortisation (EBITDA) rose to 5.95 million euros from 5.80 million euros. ($1 = 0.8540 euros) (Reporting by Gus Trompiz; Editing by Bate Felix and Alexander Smith)

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