MHP plans 2nd poultry processing plant in Europe

Viktoria Kapelushnaya, CFO of MHP, told local media group, Liga, that the company is going to launch its 2nd plant in the EU, in Slovakia, towards the end of 2017. It’s first plant in Europe now operates in Netherlands, processing some 1,500 tonnes per year.

Kapelushnaya has not revealed any further details on this initiative, only saying that the plant in Slovakia should be very similar to the one in the Netherlands. According to the company’s information, the investment cost for the plant in the Netherlands was US$3.5 million (€3.27 million).

High-margin ready-to-cook segment

Following the opening of MHP’s first plant in Europe, the country’s media Delovaya Stolitsa has suggested that the main reason for such investments is the intention of the company to sell products with the higher added value at the local markets.

According to the current version of the country’s Free Trade Zone agreement with the EU, the Ukraine has the right to deliver up to 36,000 tonnes of poultry meat per year, consisting of only raw chilled and frozen poultry, but not semi-finished and ready-to-cook production.

In this situation, and with the absence of actual potential for increasing the quotas for Ukraine, the strategy of MHP seems feasible, Delovaya Stolitsa said, adding that the country’s 2nd largest poultry manufacturer Argomars is already negotiating the possible launch of a poultry processing joint venture somewhere in Germany.

Huge investments in further expansion in Ukraine

MHP finished last year with a net profit of US$69 million (€64.64 million) after receiving a net loss in 2015 and 2014. They sold 3 assets in Crimea with a total worth of US$77.5 million (€72.62 million), although the new owner of those assets was never revealed. Some sources at the regional retailers chain Liga suggested that the assets were purchased by Miratorg, but the press-service of Russia’s agricultural holding has refuted this information.

Nevertheless, MHP stated the funds raised from this deal should be directed to further expansion of the company’s production capacities. Speaking earlier, Kapelushnaya stated that MHP in 2017 plans to increase the volume of capital investments by 50% compared to 2016, bringing them to US$150 million in total this year, with the largest part of funds being pumped into the Vinitsia poultry farm.

In 2017, MHP will start building the 2nd stage of the Vinitsia poultry farm, which will have a total investment worth US$500 million (€468 million). As a result, the designed capacity of the farm should grow from current 220,000 tonnes to nearly 440,000 tonnes by 2019, when the construction works are scheduled to be complete.