In its report for the first quarter of 2013, MHP reports chicken production up 15 per cent compared to the same period last year and it predicts a strong harvest this year, weather and plant health permitting.
MHP S.A. (Mironovskiy Hleboproduct; MHP), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, has announced its financial results for the first quarter 2013 ended 31 March 2013.
Key Operational Highlights
Poultry
The new Vinnytsia complex gradually increased operations at each production site, which are currently operating at 100 per cent of launched capacities.
As a result of the Vinnytsia complex launch, MHP’s production of chicken meat in Q1 2013 increased by 15 per cent to 103,420 tonnes compared to 90,260 tonnes in Q1 2012.
Sales of chicken meat to third parties in Q1 2013 increased by eight per cent, reaching 91,720 tonnes compared to 85,040 tonnes in Q1 2012.
The average price of chicken meat sales to third parties in Q1 2013 decreased by three per cent to UAH16.33 per kg of adjusted weight compared to Q1 2012 (UAH16.75 per kg) due to the increased share of export sales.
Export sales of chicken in Q1 2013 almost tripled the volumes of Q1 2012 and reached 23,200 tonnes. The Company continued to develop new export markets.
Due to the increase in production of feed at the Vinnytsia complex, MHP’s sales of sunflower oil in Q1 2013 increased by eight per cent to 49,310 tonnes compared to 45,558 tonnes in Q1 2012. In line with international commodity prices, the average price per tonne of sunflower oil increased by 6 per cent to US$1,149 compared to US$1,085 in Q1 2012.
Grain growing
Winter crops (winter wheat, rapeseeds, barley and rye) are in good condition.
Despite challenging spring weather conditions in Ukraine, MHP’s 2013 sowing campaign is complete.
Driven by current favourable weather conditions and health of the crops, MHP expects a strong harvest in 2013.
Other agricultural businesses
Sales volumes of processed meat products in Q1 2013 reached 7,340 tonnes compared to 7,500 tonnes in Q1 2012.
The average price for sausages and cooked meat in Q1 2013 increased by five per cent to UAH22.51 per kg (excluding VAT) compared to UAH21.53 in Q1 2012.
Key Financial Highlights in Q1 2013
Revenue increased by two per cent to US$304 million (Q1 2012: US$298 million).
EBITDA decreased by 13 per cent to US$73 million (Q1 2012: US$84 million) as a result of increased production costs for chicken meat (driven by higher grain prices at the end of 2012) and flat domestic poultry prices, which have not yet responded to the increased costs.
Net income from operations decreased by 24 per cent to US$36 million (Q1 2012: US$48 million), in line with EBITDA trends.
CEO's Comments
Commenting on the results, Yuriy Kosyuk, Chief Executive Officer of MHP, said: "I’m pleased to report that the successful launch of Vinnytsia continued to plan. As a result, in the first quarter of 2013 we substantially increased year on year poultry production volumes. At the same time, we increased sales volumes of chicken meat by eight per cent, to almost 92,000 tonnes.
"In the future, we anticipate that our export sales will grow at a higher rate compared to our domestic revenues given our strong domestic base and market share. We have witnessed this already in Q1 2013, when we increased our export sales volumes almost three times. We continued to develop new markets for our exports.
"Although the current domestic poultry price is similar to last year’s price, poultry production costs went up as a result of grain price growth at the end of 2012, which resulted in an overall profitability decline of the Company in the first quarter. However, we anticipate that this adverse effect will be compensated during 2013 by increasing sales volumes of poultry and grain crops as a result of the planned expansion of our land bank."
