UKRAINE: Sales up, profitability mixed at poultry firm MHP
- Poultry production up 30% year-on-year
- Sales volumes grew domestically and in export markets
- MHP "significantly increased" sales to Middle East, Asia, Africa
MHP said it had worked to broaden geographical reach
London-listed Ukraine poultry processor MHP has reported higher first-quarter sales and EBITDA - but saw foreign exchange losses hit its bottom line.
The company booked a 2% rise in revenue to US$309m for the three months to the end of March.
Higher production volumes helped sales. Average chicken meat prices were down 4% on the first quarter of 2013.
The improved volumes and lower costs meant the group's EBITDA climbed 45% to $106m.
However, the devaluation of the Ukraine hryvna during the quarter amid the turmoil in the country left MHP with resulted in non-cash foreign exchange translation losses of $366m.
Net profit before those losses increased by 64% to $51m. After the forex impact, MHP posted a net loss of $316m, versus a profit of $36m in last year's first quarter.
May 14, 2014, Kyiv, Ukraine
Financial Results for the First Quarter 2014
MHP S.A. ("MHP" or the "Company", LSE ticker: "MHPC"), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, today announces its financial results for the first quarter 2014 ended 31 March 2014.
Key operational highlights
o Currently 9 from 12 production sites at the Vinnytsia complex are operational at full capacity.
o Owing to increasing production volumes at Vinnytsia during 2013, MHP's overall production volumes of chicken meat in Q1 2014 increased by approximately 30% year-on-year.
o Sales of chicken meat to third parties in Q1 2014 increased by 22% reaching 112,270 tonnes compared to 91,720 tonnes in Q1 2013.
o Domestic sales volume increased by 20% and export sales volume increased by 31% to 30,370 tonnes, compared to 23,200 tonnes in Q1 2013.
o As poultry exports to Custom Union territories were banned during Q1, MHP continued to diversify its export markets by substituting sales to Middle Eastern, Asian, African and some CIS countries.
o The average chicken meat price, and export prices, remained at approximately the same level in Q1 2014 as in Q4 2013. The average Q1 price decreased by 4% year-on-year to UAH 15.61 per kg of adjusted weight (excluding VAT), mostly due to lower export prices year-on-year.
o Due to the increased production of fodder at Vinnytsia, MHP's sales of sunflower oil in Q1 2014 grew by 37% to 67,520 tonnes compared to 49,310 tonnes in Q1 2013. In line with international commodity prices, the average price per tonne of sunflower oil decreased by 26% to US$853 compared to US$1,149 in Q1 2013.
o MHP's 2014 spring sowing campaign is almost complete and all winter crops (winter wheat, rapeseeds, barley and rye) are in good condition.
o Driven by an increased land bank and current favorable weather conditions, MHP expects a strong harvest in 2014.
o Sales volume of processed meat products in Q1 2014 declined to 6,856 tonnes compared to 7,340 tonnes in Q1 2013 due to ongoing product mix optimization.
o The average price for sausages and cooked meat in Q1 2014 increased by 7% to UAH 24.10 per kg (excluding VAT) compared to UAH 22.51 in Q1 2013.
Key financial highlights Q1 2014
o Revenue increased by 2% to US$309 million (Q1 2013: US$304 million).
o EBITDA increased by 45% to US$106 million (Q1 2013: US$73 million), mostly driven by higher poultry production volumes and a decline in poultry production costs.
o The 37% devaluation of the Hryvna during the quarter resulted in non-cash foreign exchange translation losses of US$366 million.
o Net profit before FX losses in Q1 2014 increased by 64% to US$51 million compared to US$31 million in Q1 2013. After FX losses, the net loss amounted to US$316 million (Q1 2013: profit of US$36 million).
Commenting on the results, Yuriy Kosyuk, Chief Executive Officer of MHP, said:
"I'm pleased to report that, despite the challenging macroeconomic and political situation in Ukraine, in the first quarter of 2014 the Company continued to grow and develop.
During the first quarter, poultry production increased by 30% year-on-year, and our sales volumes grew substantially, both domestically and in export markets. Export sales increased by over 30% during the reporting period. The Company continues to focus its growth strategy on exports, through increasing both sales volumes and geographic diversification. During the period we significantly increased our sales to Middle Eastern, Asian, African and some CIS countries, which compensated for reduced sales to the Custom Union.
Our vertical integration business model also contributed to our strong financial results. As a result of lower priced crops harvested in 2013, poultry production costs decreased significantly in the first quarter 2014. We anticipate this trend will continue during the whole year.
We have started 2014 with optimism supported by strong results, which create a sound platform for future progress in operational and financial performance."
- end -
Original source: MHP
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