Ukrainian grain-to-poultry firm MHP has said that it continues to develop its processed meats business in order to shift its mix to higher margin products.

In a pre-close trading update, MHP said said volumes of cooked meats "decreased slightly" in the first quarter to 31 March. However, the group said that selling prices rose 7% year-on-year as a result of "product portfolio rebalancing".

The company said: "MHP continues to execute its strategy of increasing the company's market share in meat processing products, by using internally produced chicken meat."

The company has also invested in increasing its poultry production levels and increased production of chicken by 30% year-on-year. Sales to third parties rose 22%, led by a 31% increase in export levels.

MHP will unveil its full first quarter numbers on 22 May.

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MHP S.A.
Pre-close trading update for the 
first quarter ended 31 March 2014

MHP S.A. (LSE: MHPC) ("MHP" or "The Company"), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, announces its pre-close trading update for the three months ended 31 March 2014.

Poultry and Related Operations

Owing to increasing production volumes at the Vinnytsia poultry farm during 2013, MHP's overall production volumes of chicken meat in Q1 2014 increased by approximately 30% year-on-year. As usual, the Company's poultry production facilities continued to operate at full capacity during the period.

Poultry   

Q1  2014

Q1  2013

% change

Sales volume, third parties tonnes

112,270

91,720

22%

Price per 1 kg net VAT, UAH

15.61

16.33

-4%

Sales of chicken meat to third parties in Q1 2014 increased by 22% reaching 112,270 tonnes of chicken meat compared to 91,720 tonnes in Q1 2013. Domestic sales volume increased by 20% while export sales volume increased by 31%.

Export Sales: In line with the Company's growth strategy of its export sales, during the first quarter of 2014 the volume of chicken meat export increased by 31% and reached 30,370 tonnes, compared to 23,200 tonnes in Q1 2013 despite decreased export to the Custom Union as at the beginning of February MHP was banned from exporting of chicken meat to the Russian Federation as well as to other Custom Union countries (Kazakhstan and Belarus). During the reporting period the Company significantly increased its export sales to the Middle East, Asian, African, the EU and to some CIS countries, diversifying export markets.

The average chicken meat price through the first quarter of 2014 remained at approximately the same level with prices in Q4 2013, but decreased by 4% to UAH 15.61 per 1 kg of adjusted weight (excluding VAT) when compared to Q1 2013. Average price decreased mostly due to lower export prices year-on-year although export prices in Q1 2014 remained at the level of last months of 2013.  

Vinnytsia - expansion project

All production sites of the Vinnytsia complex (9 of 12 chicken rearing sites, poultry processing facility and fodder complex) are operational and will reach its full capacity closer to the year-end as 3 final chicken rearing zones will be added.

Sunflower Oil Sales

Sunflower Oil

Q1  2014

Q1 2013

% change

Sales volume, tonnes

67,520

49,310

37%

Price per 1 tonne, US$

853

1,149

-26%

In Q1 2014, due to increased production of fodder for chicken, MHP's sales of sunflower oil increased significantly by 37% to 67,520 tonnes compared to 49,310 tonnes in Q1 2013. In line with international trend of the commodity prices, average price per 1 tonne of sunflower oil decreased by 26% to US$853 compared to US$1,149 in Q1 2013.

Grain growing operations

Almost 64,000 hectares of land in Ukraine and above 8,000 hectares in the Russian Federation are under the winter crops (winter wheat, rapeseeds and barley), which are around 25% of the land cultivated in the grain growing segment of the Company. Currently, all crops are in good condition. As a result, MHP expects good harvest of winter crops in 2014.

MHP's 2014 spring sowing campaign is ongoing now.

 

Other agricultural operations

Meat processing products

Q1     2014

Q1 2013

% change

Sales volume, third parties tonnes

   6,856

   7,340

   -7%

Price per 1 kg net VAT, UAH

   24.10

   22.51

   7%

Sales volumes of sausage and cooked meat in Q1 2014 decreased slightly to 6,856 tonnes compared to 7,340 tonnes in Q1 2013.

The average sausage and cooked meat price in Q1 2014 increased by 7% to UAH 24.10 per kg (excluding VAT) compared to UAH 22.51 in Q1 2013 as a result of product portfolio rebalancing with the focus on higher-margin products. MHP continues to execute its strategy of increasing the Company's market share in meat processing products, by using internally produced chicken meat.

Original source: MHP