Last checked at 16 Oct 2012 07:00
PRESS RELEASE
October 16, 2012, Kyiv, Ukraine
MHP S.A.Pre-close trading update for the third quarter and nine months of 2012
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, is pleased to announce today its pre-close trading update for the third quarter and nine months ended 30 September 2012.
Poultry and Poultry Related Operations
Poultry | Q3 2012 | Q3 2011 | % change | 9M 2012 | 9M 2011 | % change | |
Sales volume, third parties tonnes | 93,200 | 99,900 | -7% | 274,800 | 282,000 | -3% | |
Price per 1 kg net VAT, UAH | 17.57 | 16.11 | 9% | 17.29 | 14.39 | 20% |
During nine months of 2012 MHP increased its overall production volumes by 4,000 tons to 295,000 tons mostly driven by an increase in production in Q3 2012 due to the trial production start at the Vinnytsia complex.
Domestic demand for chicken meat during the nine months of 2012 remained high and the Company was able to sell close to 100% of the chicken produced.
In Q3 and 9M 2012 chicken meat sales volumes to third parties were lower compared to Q3 and 9M 2011 because in Q3 2011 the Company sold almost 10,000 tons of chicken meat from its stocks (historically: during Q3 and 9M 2011 the Company's sales volumes of chicken meat were higher than its production). Please see the results above.
Export sales for the nine months of 2012 increased by almost 20% compared to the same period last year, which resulted in almost 11% of MHP's poultry production.
The average chicken meat price through the third quarter of 2012 increased by 9% to UAH 17.57 per kg of adjusted weight (excluding VAT) when compared to the third quarter of 2011. Through the nine months of 2012 average chicken prices increased by 20% to UAH 17.29 per kg (9M 2011: UAH 14.39 per kg) mostly due to the strong prices for poultry meat in the first half of 2012.
In Q3 2012, 52,350 tons of sunflower oil were sold mainly for export at an average price of US$ 1,084 per ton compared to US$ 1,284 per ton in Q3 2011, which resulted in 16% lower price in line with world market trends. For the nine months of 2012, 147,100 tons of sunflower oil were sold at an average price of US$ 1,100 per ton compared to US$ 1,297 per ton in 9M 2011, which is 15% lower in price but in line with commodity market trends.
Grain Growing Operations
In 2012 the Company is 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 in Ukraine and taking into account challenging situation with harvest in the USA and Russia, we expect our yields to be good enough and significantly higher than Ukraine's average, due to our operational efficiency and employment of best practice.
The Company's harvest is on track. The Company forecasts strong harvest and yields for corn, taking into account current crop conditions. In general, MHP's early crops yields are significantly higher than Ukraine's average and compared to yields in 2011.Corn and sunflower yields are in line with MHP's forecast for this year taken into account weather conditions.
The Company has now completed its wheat, rapeseed, and sunflower harvests.
2012 | 2011 | ||||||
Production, tons | Cropped hectares* | Production, tonnes | Cropped hectares* | ||||
Corn | In process | In process | 1,022,783 | 107,750 | |||
Wheat | 208,770 | 39,000 | 267,250 | 52,210 | |||
Sunflower | 91,110 | 30,370 | 73,735 | 27,000 | |||
Rapeseed | 42,570 | 12,385 | 25,400 | 9,150 | |||
Other** | In process | In process | 322,900 | 54,090 | |||
Total: | n/a | n/a | 1,712,068 | 250,200 | |||
* - Actual hectares under crop and excluding land left fallow as part of crop rotation
** - Includes soybean, barley, rye, sugar beet and other
2012 | 2011 | ||||||
MHP's average* | Ukraine's average* | MHP's average* | Ukraine's average* | ||||
Corn | In process | In process | 9.5 | 6.4 | |||
Wheat | 5.4 | 2.9 | 5.1 | 3.4 | |||
Sunflower | 3.0 | 1.7 | 2.7 | 1.8 | |||
Rapeseed | 3.4 | 2.3 | 2.8 | 1.7 | |||
* - Tonnes per hectare
** - MHP yields are net weight, Ukraine - bunker weight
The Company's corn harvest is ongoing and as of today it is 50% complete. The current net yield is averaging 8.0 tons per hectare (2011: 9.5 tons per hectare) compared to Ukraine's average of 4.1 tons per hectare (Source: Committee of Statistics).
During the reporting periods of 2012 the Company was selling crops and continued to conclude forward export contracts from 2012 harvest.
Other Agricultural Operations
Meat processing products | Q3 2012 | Q3 2011 | % change | 9M 2012 | 9M 2011 | % change | |
Sales volume, third parties tonnes | 10,100 | 10,900 | -7% | 26,610 | 28,200 | -6% | |
Price per 1 kg net VAT, UAH | 22.34 | 20.60 | 8% | 22.02 | 19.57 | 13% |
Through the first nine months of 2012 the Company continued to execute its strategy of product mix optimization on the Ukrainian market. During the third quarter of 2012, sausage and cooked meat production volumes decreased by 7% to 10,100 tons compared to 10,900 tons during the third quarter of 2011. During the first nine months of 2012 volumes decreased by 6% to 26,610 tonnes (9M 2011: 28,200 tonnes).
At the same time the average sausage and cooked meat prices during the third quarter of 2012 increased by 8% to UAH 22.34 per kg excluding VAT (Q3 2011: UAH 20.60) and through the first nine months of 2012 increased by 13% to UAH 22.02 per kg excluding VAT (9M 2011: UAH 19.57 per kg).
Vinnytsia - expansion project
MHP's new green field Vinnytsia project is being constructed to schedule and in line with the investment plans. Since June 2012 we launched several chicken brigades and a slaughter house in a trial mode. We plan to launch the capacity in industrial production close to the end of 2012.
To follow the progress on the site please visit: http://www.mhp.com.ua/en/node/1082/.
The financial results for the nine months of 2012 will be published on 15 November, 2012. 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 please contact:
For investor relations and media enquiries Anastasiia Sobotiuk (Kyiv)
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Kyiv: +38 044 207 99 58 a.sobotyuk@mhp.com.ua |
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 11 distribution and logistical centers, 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.