MHP boosts production but posts losses
Depreciation of the Hryvnia has led to Ukraine’s largest poultry producer, MHP, reporting a loss of revenue in its operational figures from January-September this year.
The company has faced US$302 million of net loss against US$150 million of net profit during the first nine months of 2013.
Operational highlights
Q3 2014 highlights
- Production volumes increased by 9% to 133,700 tonnes (Q3 2013: 122,350 tonnes)
- The average chicken price increased by 37% year-on-year to UAH 22.08 per kg (excluding VAT) predominantly due to the Ukrainian Hryvnia depreciation
- Chicken meat export increased by 48% and reached 44,580 tonnes (Q3 2013: 30,000 tonnes)
9M 2014 highlights
- Production volumes increased by 16% to 403,300 tonnes (9M 2013: 346,940 tonnes)
- The average chicken price increased by 15% to UAH 18.61 per kg (excluding VAT) compared to UAH 16.21 in 9M 2013
- Chicken meat export increased by 20% and reached 102,145 tonnes (9M 2013: 84,780 tonnes)
Financial highlights
Q3 2014 highlights
- Revenue of US$397 million, a decrease of 6% y-o-y
- Operating profitof US$154 million, up 71% y-o-y
- EBITDA increased 47% to US$ 181 million, with EBITDA margin of 46%, up from 29% last year
- Net loss for the period is US$32 million, of which US$107 million relates to non-cash foreign exchange translation losses
9M 2014 highlights
- Revenue of US$1,034 million, decrease of 4% y-o-y
- Operating profit of US$381 million, up 61% y-o-y
- EBITDA increased 43% to US$ 453 million, with EBITDA margin of 44%, up from 29% last year
- Net loss of US$302 million, including US$561 million of relates to non-cash foreign exchange translation losses
Shahtarska breeding farm
Shahtarska breeding farm had to suspend its operations since August due to the active hostilities in the region (zone of ATO, currently controlled by DNR) and still is not in operations. Shahtarska breeding farm provided MHP with appx.30% of hatching eggs needs. Currently MHP is importing hatching eggs from the EU (predominantly Hungary, Germany and the Netherland) and partially Ukraine, so that during the first nine months of 2014 MHP’s poultry production facilities (broiler farms) worked at full capacity utilization.
CEO statement
Chief executive officer, Yuriy Melnyk, commented: “In spite of the ongoing political and economic difficulties in Ukraine, MHP has been able to deliver remarkably strong results for the third quarter and the first nine months of this year. Overall production of both poultry and grain has been substantially unaffected, with poultry tonnage increasing by 22% and grain production by 54% for the nine-month period compared with the previous year. This reflects not only our past investments in increasing capacity, but also lower production costs, higher grain yields and, not least, the continuing commitment and support of our employees in these difficult times.
Among the challenges our company has faced this year have been the imposition of an import ban by the Customs Union in February, and temporary suspension of the Shahtarska breeding farm (located in the Donetsk region), which produced 30% of MHP’s hatching eggs.
Our successful export diversification strategy has enabled us both to minimize the impact of the Customs Union import ban and to increase export volumes of chicken meat by 22% year-on-year. The loss of hatching eggs from Shahtarska has been fully offset by importing eggs from reputable breeding farms with only a minor negative impact on costs. We are strongly committed to supporting our Shahtarska employees, for example by offering opportunities for temporary employment and accommodation at other MHP production sites.
These strong results provide further validation of MHP’s unique business model of vertical integration, competitive cost structure and intensive investment in state-of-the-art facilities. We believe that these will continue to be strong drivers for the Company’s continuing growth and development both in poultry and grain and are confident that we will continue to deliver strong operational and financial performance in 2014 and beyond.”
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