MHP sticks to acquisition plans despite Covid-19 impact

“Although the effects of the Covid-19 pandemic did not have a material impact on the first quarter’s performance, and the MHP’s poultry production facilities have been operating at full capacity since the beginning of April, Covid-19 is expected to have an adverse effect on the MHP’s earnings in the second quarter, mainly because of lower prices on the world market due to lower demand,” MHP said. “With its vertical integration, competitive production costs, and market diversification, MHP is well-positioned to face these uncertainties and potential turbulence on both Ukrainian and export markets. MHP, therefore, continues to expect another year of strong performance in 2020,” the company added.

MHP is still interested in M&A deals. We have an appetite to move in this direction, including through acquisitions. We are looking into it, but this is a long process.”

The pandemic shouldn’t have an impact on the company’s export growth. In 2020, export sales are predicted to climb by 10% over the previous year to 390,000 tonnes. The company said the main markets are still countries within the EU, MENA, CIS, and Africa. During the first quarter of 2020, MHP exported 82,048 tonnes of poultry, which was 12% lower than the same period last year, with a significant decrease of countries in its export portfolio, the company reported in a separate statement.

Investment programme untouched

In a follow-up statement, Viktoria Kapelyushnaya, Chief Financial Officer of MHP, said that despite the pandemic, the company had not revised its investment strategy. MHP invested $ 100 million to reach its strategic target of transformation from a raw materials company into a “culinary” company. This means that the company wants to focus on customer-centric products. The company also invested $ 21 million into the development of Perutnina Ptuj during the first quarter of 2020, Kapelyushnaya said. “MHP is still interested in M&A deals. We have an appetite to move in this direction, including through acquisitions. We are looking into it, but this is a long process,” she said.

The company expects to see a recovery of the global prices for poultry in the course of the year, Kapelyushnaya said. The prices fell by 11% at the beginning of 2020. It would be good news if the prices recover to the 2019 level, but that would be a too optimistic forecast, Kapelyushnaya said. The increase in prices for grain is a basis for the recovery in poultry prices, Kapelyushnaya added.

MHP was primarily targeting acquisitions in Europe and the Middle East, the company reported at the beginning of the year. MHP was looking at Saudi Arabia for acquisitions and joint venture projects to develop its poultry and meat-processing business further, Anastasiya Sobotyuk Director of Investor Relations at MHP said.