Last checked at 1 Feb 2011 07:00
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PRESS RELEASE
February 1, 2011, Kyiv, Ukraine
MHP S.A.Pre-close trading update for the year ended 31 December 2010
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 Q4 2010 and the full year ended 31 December 2010.
Poultry and Poultry Related Operations
Poultry | Q4 2010 | Q4 2009 | % change | FY2010 | FY2009 | % change | |
Sales volume, third parties tonnes | 81,900 | 80,000 | 2% | 331,400 | 272,900 | 21% | |
Price per 1 kg net VAT, UAH | 14.35 | 12.37 | 16% | 13.65 | 12.79 | 7% |
Despite Ukraine's total poultry production volumes in 2010 only increasing 9% (Source: Association of Poultry Producers of Ukraine), MHP increased its poultry productions volumes by more than 20%, thereby significantly outperforming the market.
During the fourth quarter of 2010 the volume of chicken meat sales to third parties increased by 2% compared to the fourth quarter of 2009, reaching 81,900 tonnes. Full year volumes increased by 21% to 331,400 tonnes. The volume growth was primarily a result of the phase two of the Myronivka poultry farm operating at full capacity full year. All the Company's existing poultry production facilities operated at their full production capacity during the year.
The price of all kinds of meat has increased in both Ukraine and the wider world as a result of the increased cost of grain. Chicken meat prices were less affected by the grain prices growth due to better fodder conversion ratio compared to other meats.As a result, during the year, consumer demand for chicken remained high and consumers continued to substitute other meats with locally produced chicken. As a result, the Company was able to sell close to 100% of the chicken produced.
Average chicken meat sales prices to third parties in Q4 2010 increased by 16 % to UAH 14.35 per kg. of adjusted weight (excluding VAT) when compared to the fourth quarter of 2009. For the full year 2010 prices increased by 7% to UAH 13.65 per kg against 2009.
Poultry production costs in Q4 2010 rose slightly in UAH compared to Q4 2009 due to the increase of the price of corn on the open market, which the Company uses to calculate its costs. However, as MHP is 100% self sufficient in corn and has a high level of vertical integration, these higher prices in Q4 2010 will have a positive effect on the financial performance of the Company's Grain Growing segment.
Sunflower oil | Q4 2010 | Q4 2009 | % change | FY2010 | FY2009 | % change | |
Sales volume, third parties tonnes | 46,200 | 49,150 | -6% | 195,800 | 140,400 | 39% | |
Price per 1 tonne net VAT, US$ | 1,173 | 770 | 52% | 919 | 721 | 27% |
Following a year of full capacity operation of MHP's Katerynopilsky sunflower crushing plant, 195,800 tonnes of sunflower oil was produced in the full year 2010, compared to 140,400 tonnes in the full year 2009, an increase of 39%. All of the sunflower oil produced was sold to external customers at an average price of US$ 919 per tonne which was an increase of 27% on the 2009 average of US$ 721, in line with world pricing trends.
In Q4 2010, 46,200 tonnes were produced and sold for export at an average price of US$ 1,173 per tonne (Q4 2009: US$ 770). The increase in both sales volumes and price resulted in the growth of foreign currency income from export sales of sunflower oil, accounting in 2010 for US$ 180 million (compared to US$ 100 million in 2009).
Grain Cultivation
During 2010 the Company continued to execute its stated strategy of gradually increasing its land bank and at the end of the period it had more than 280,000 hectares of land under control. At the same time, in 2010 the bulk of the Company's harvest will be generated from land that was under the Company's control at the beginning of the year (total land bank as on December 31, 2009: 180,000 hectares, including 150,000 hectares in Grain Growing segment).
MHP's 2010 harvest was lower yielding than 2009 due to adverse weather conditions, but still significantly higher than Ukraine's average per hectare. The lower yields in Eastern Europe also effected price increases resulting in increased profitability per hectare for MHP compared to 2009.
2010* (for land under control as of 01.01.2010) | 2009 | ||||||
MHP's average* | Ukraine's average** | MHP's average* | Ukraine's average** | ||||
Corn | 7.8 | 4.3 | 9.0 | 5.0 | |||
Wheat | 4.7 | 2.9 | 5.8 | 3.1 | |||
Sunflower | 2.6 | 1.6 | 3.3 | 1.5 | |||
Rapeseed | 3.0 | 1.7 | 2.7 | 1.9 | |||
* - Tonnes per hectare
** - Source: the State Committee on Statistics of Ukraine, based on bunker weight
2010* (for land under
control as of 01.01.2010)
Production, tonnes | Cropped hectares* | Production, tonnes | Cropped hectares* | ||||
Corn | 492,642 | 63,165 | 432,603 | 48,540 | |||
Wheat | 183,785 | 39,360 | 208,002 | 35,529 | |||
Sunflower | 65,455 | 25,630 | 79,845 | 24,002 | |||
Rapeseed | 9,010 | 3,020 | 38,618 | 14,423 | |||
Other** | 162,166 | 15,442 | 201,412 | 24,757 | |||
Total: | 913,058 | 146,617 | 960,480 | 147,313 |
* - Actual hectares under crop and excluding land left fallow as part of crop rotation
** - Includes soybean, barley and sugar beet
Other Agricultural Operations
Meat processing products | Q4 2010 | Q4 2009 | % change | FY2010 | FY2009 | % change | |
Sales volume, third parties tonnes | 8,800 | 6,400 | 38% | 32,900 | 24,650 | 33% | |
Price per 1 kg net VAT, UAH | 18.52 | 17.24 | 7% | 17.59 | 17.33 | 2% |
Following further expansion of Ukrainian Bacon facility production of sausage and cooked meat volumes increased by 33% to 32,900 tonnes in 2010 compared to 24,650 tonnes in 2009. Q4 2010 sausage and cooked meat production volumes increased by 38% to 8,800 tonnes compared to 6,400 tonnes during Q4 2009.
Average sausage and cooked meat prices during 2010 increased by 2.0% to UAH 17.59 per kg excluding VAT (FY 2009: UAH 17.33 per kg.). The average price in Q4 2010 increased 7% to 18.52 UAH per kg compared to UAH 17.24 per kg in Q4 2009. MHP is a market leader in meat processing in Ukraine and management expects further increases in its market share.
The exact date for the financial results for Q4 2010 and full year 2010 will be confirmed in a due course.
For further information please contact:
Financial Dynamics Ben Foster (London) Marc Cohen (London) Hazel Stevenson (London)
Leonid Solovyev (Moscow)
For Investor Relations enquiries Anastasiia Sobotiuk (Kyiv)
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London: +44 20 7831 7176
Moscow: +7 495 795 06 23
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 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.