ShapeShapeauthorShapechevroncrossShapeShapeShapeGrouphamburgerhomeGroupmagnifyShapeShapeShaperssShape

MHP Sees Income Soar

30 August 2012, at 8:03am

UKRAINE - Mironovskiy Hleboproduct SA (MHP S.A.), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, has reported a 24 per cent increase in revenue in the first half of 2012 to US$654 million compared to $527 million in the first half of 2011.

EBITDA increased by 46 per cent to $ 231 million compared to $158 million in 2011 and net income increased by 97 per cent to $170 million compared to $86 million in the first half of 2011, mainly in line with EBITDA growth.

Revenue in the second quarter of the year rose by 27 per cent to $357 million compared to $281 million in the same period of 2011.

EBITDA rose by 45 per cent to $147 million compared to $101 million in 2011 and net income increased by 83 per cent to $122 million compared to $67 million in the second quarter of 2011, mainly in line with EBITDA growth, and positively affected by foreign-exchange gains.

Yuriy Kosyuk, Chief Executive Officer of MHP, said: "The Company has continued to perform strongly in results and operations in the first half of 2012.

"Poultry prices growth in the first half of 2012 was strong, as previously forecasted. As a result, we have delivered robust revenues and EBITDA growth in the poultry business segment, which greatly contributed to the Company's overall profitability.

"Our expectations regarding results in the grain growing segment are favorable despite weather challenges during the second quarter of 2012. With regard to the early crops, MHP experienced a good harvest with good yields, which again are substantially stronger than Ukraine¡¦s average. World grain prices this year are very strong, driven mostly by trends on US market, which guarantees us good performance of our grain growing segment for the full year.

"As I promised to our shareholders, since June 2012 we have started trial production at Vinnytsia project testing equipment, processes and resources.

"Looking ahead, the quality of our products continues to attract consumers, and demand remains high. We are discovering new export markets, and building strong relationships with new partners. We are therefore confident that we will continue to expand in line with our strategy and to produce strong financial results."

Poultry Production

During the first half of the year all the company's chicken production facilities continued to operate at full capacity.

MHP said that consumer demand for chicken remained high and the company was able to sell close to 100 per cent of the chicken meat produced.

The Company's share of industrially produced chicken in Ukraine in the first half of 2012 remained around 50 per cent.

The volume of chicken meat sales to external customers in H1 2012 year-on-year remained unchanged at 181,600 tonnes.

Thanks to the favourable market environment in Ukraine and seasonal trend, the average chicken meat price in the second quarter of 2012 rose by four per cent compared to the first quarter.

At the same time the average price in the second quarter of 2012 increased by 25 per cent to UAH 17.48 per kg of adjusted weight (excluding VAT) when compared to second quarter of 2011.

As a result of a stable and strong poultry prices during the first two quarters of 2012, the difference between the first half of 2011 and the first half of 2012 chicken meat prices constituted 28 per cent, which is an increase from UAH 13.44 per kg to UAH 17.14 per kg.

In the first half of 2012, 94,749 tonnes of sunflower oil were sold at an average price of US$1,109 per tonne, which was 15 per cent lower in price compared to the first half of 2011 (US$ 1,303 per tonne) in line with world market price trends.

During the second quarter of 2012 the volume of exported chicken meat sales continued the growing dynamics of previous quarters, exploring new business opportunities in African countries.

This resulted in around 30 per cent growth in the first half of 2012 compared to the same period last year, to almost 20,000 tonnes of frozen chicken export.

Grain Growing

In 2012 the company expects to harvest around 250,000 hectares of land in grain growing operations and to cultivate around 30,000 hectares of land in other agricultural operations. Total land bank in 2012 remains relatively stable at around 280,000 hectares.

Despite concerns over weather conditions and significantly lower results across all early crops in Ukraine (wheat, barley, rapeseeds) and taking into account the challenging situation with harvest in the USA and Russia, our yields of early crops are good and significantly higher than Ukraine's average, due to our operational efficiency and employment of best practice.

MHP's current yields of wheat (5.4 tonnes per hectare) and rape (3.4 tonnes per hectare) are close to twice Ukraine's average.

The Company benefits from high world prices for early crops as well as for corn.

Other Agriculture

Sausage and cooked meat production volumes decreased from 17,300 tonnes in H1 2011 to 16,510 tonnes in H1 2012 due to the continuous product mix optimisation.

The Company's market share of Ukraine¡¦s sausage and cooked meat products in Ukraine was around 10 per cent.

Construction of most sites at the Vinnytsia green field expansion project has been completed and equipment is being installed.

Production in Phase 1 is expected to be launched by the end of 2012 and reach its full capacity of 220,000 tonnes of poultry per annum in 2015.