Mhp Reg S Regulatory News (MHPC)

PRESS RELEASE

July 16, 2015, Kyiv, Ukraine

MHP S.A.Pre-close trading update for the second quarter and first half of 2015

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, today announces its pre-close trading update for the second quarter and the first six months of the year ending 30 June 2015.

Poultry and Poultry Related Operations

As usual, the Company's poultry production facilities continued to operate at full capacity during the period.

Owing to the increasing production volumes at the Vinnytsia poultry farm, poultry production volumes in Q2 2015 increased by 4% to 138,050 tonnes (Q2 2014: 132,350 tonnes) and in H1 2015 increased by 4% to 278,430 tonnes (H1 2014: 268,880 tonnes).

As a result of an overall increase in poultry production volumes during the second quarter of 2015, the sales volume of chicken meat to external consumers increased to 143,780 tonnes, which is 3% higher than in Q2 2014. During the first six months of 2015 third parties sales amounted to 257,420 tonnes of poultry, which is 2% higher than in H1 2014.

Domestic sales: MHP's domestic sales volumes in Q2 2015 decreased by 8% and in H1 2015 decreased by around 2% year-over-year accordingly due to decreased chicken meat sales in Donetsk and Luhansk regions.

Export Sales: During the second quarter of 2015 the volume of chicken meat exports totaled 39,960 tonnes, which is by 47% higher compared to Q2 2014. During the first half of 2015, poultry exports increased by 15% compared to H1 2014 and reached 66,020 tonnes. MHP continues to explore new business opportunities in the countries of Asia, the Middle East and Africa building-up the export volumes of chicken meat in those regions.

The EU market is being developing well so far with a significant over 230% increase in volume MHP sold to that region in H1 2015 compared to H1 2014 and reached around 11,690 tonnes. The EU market share currently represents around 18% of MHP's total poultry export sales (H1 2014: around 6%).

Prices: Through the second quarter of 2015 the average chicken meat price (both domestic and export) constituted UAH 27.73 per 1 kg of adjusted weight (excluding VAT), an increase of 9% compared to Q1 2015 and over 55% year-on-year. H1 2015 average chicken meat price was UAH 26.65, which is 58% higher than in H1 2014. The increase in poultry prices is mostly related to the increase of domestic price by around 40% in Q2 2015 year-on-year and a positive influence of Ukrainian hryvnia devaluation due to US dollars nominated export prices.

Oils

Due to the increase of the production of fodder meal at the Vinnytsia complex in Q2 2015, MHP sold 79,030 tonnes of sunflower oil, which was 13% higher than in Q2 2014, mainly for export. The average price of US$766 per tonne in Q2 2015 was 11% lower than in Q2 2014 (US$861 per tonne) in line with world market trends. In H1 2015, 145,800 tonnes of sunflower oil, which was 6% higher than in H1 2014, were sold at an average price of US$779 per tonne, which was 9% lower in price compared to H1 2014 (US$857 per tonne). 

Soybeans Oil: Since Q2 2015 MHP has started to export soybeans oil produced from last year harvest using one of the Ukrainian soybeans oil extraction plants. At the same time, soybeans cake is used for fodder production at MHP's fodder production facilities. The launch of own soybeans extraction facility is expected in September 2015.

In Q2 2015 MHP exported around 5,100 tonnes of soybeans oil at US$733 per 1 tonne.

The Company considers soybeans oil exports as one of the "natural hedge" routes accumulating additional hard currency revenues and protecting the Company from volatilities with local currency.

Grain Growing Operations

In 2015 in grain growing operations the Company is to harvest around 340,000 hectares of land in Ukraine, of which 50,000 ha are newly acquired assets (swap with the assets in the Russian Federation in Voronezh region).

Due to the favorable weather conditions in Ukraine, operational efficiency and employment of best practice, we expect our yields across all crops to be good and significantly higher than Ukraine's average.

The Company started harvesting rapeseeds, barley and wheat. Current yields are in line with our expectations.

Spring crops (corn, soybeans and sunflower) are in good condition.

Other Agricultural Operations

In the second quarter of 2015, sausage and cooked meat sales volumes decreased by 19% to 6,714 tonnes compared to 8,316 tonnes in the second quarter of 2014. In the first half of 2015 sausage and cooked meat sales volumes decreased by 21% to 11,990 tonnes compared to 15,172 tonnes in H1 2014. These trends in general are driven by a decrease of overall consumption of meat processing products in Ukraine.

Average sausage and cooked meat prices during the second quarter of 2015 increased by 68% to UAH 44.44 per kg excluding VAT (Q2 2014: UAH 26.50 per kg). In H1 2015 average prices increased by 67% from UAH 25.40 per kg excluding VAT to UAH 42.33 per kg excluding VAT.

Next release: The financial results for Q2 and H1 2015 will be published on August 26, 2015. There will be a conference call for investors and analysts on the day that will take place at 4pm Kyiv time (2 pm London/5 pm Moscow). Dialing instructions for the call will be published in a due course.

For further information and Investor Relations enquiries please contact:

Notes to Editors:

About MHP

MHP is the leading producer of poultry products in Ukraine with the greatest market share and highest brand recognition for its products. MHP owns and operates each of the key stages of chicken production processes, from feed grains and fodder production to egg hatching and grow out to processing, marketing, distribution and sales (including through MHP's franchise outlets). Vertical integration reduces MHP's dependence on suppliers and its exposure to increases in raw material prices. In addition to cost efficiency, vertical integration also allows MHP to maintain strict biosecurity and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale. To support its sales, MHP maintains a distribution network consisting of 15 distribution and logistical centres, within major Ukrainian cities. MHP uses its trucks for the distribution of its products, which Management believes reduces overall transportation costs and delivery times.

MHP also has a leading grain cultivation business growing corn to support the vertical integration of its chicken production and increasingly other grains, such as wheat and rape, for sale to third parties. MHP leases agricultural land located primarily in the highly fertile black soil regions of Ukraine.

Since May 15, 2008, MHP has traded on the London Stock Exchange under the ticker symbol MHPC.

Forward-Looking Statements

This press release might contain forward-looking statements that refer to future events or forecast financial indicators for MHP S.A. Such statements do not guarantee that these are actions to be taken by MHP S.A. in the future, and estimates can be inaccurate and uncertain. Actual final indicators and results can considerably differ from those declared in any forward-looking statements. MHP S.A. does not intend to change these statements to reflect actual results.