Last checked at 18 Apr 2018 07:00
18 April 2018, Limassol, Cyprus
MHP SEPre-close trading update for the first quarter ended 31 March 2018
MHP SE (LSE: MHPC), the parent company of a leading international agro-industrial group with headquarters in Ukraine, focusing primarily on the production of poultry and cultivation of grain, as well as other agricultural operations (meat processing and meat products ready for consumption) today announces its pre-close trading update for the three months ended 31 March 2018. Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "The Company" or "The Group".
POULTRY AND RELATED OPERATIONS
As usual, the Company's poultry production facilities continued to operate at full capacity during the reporting period.
MHP's overall production volumes of chicken meat in Q1 2018 increased by 7% and constituted 152,167 tonnes (Q1 2017: 141,874 tonnes), as a result of a decreased percent of flock thinning and increased production of bigger broiler carcasses.
Poultry Sales | Q1 2018 | Q1 2017 | % change | |
Sales volume, third parties tonnes | 135,307 | 123,931 | 9% | |
- Domestic sales | 72,163 | 74,780 | -4% | |
- Exports | 63,144 | 49,151 | 28% |
Sales of chicken meat to third parties in Q1 2018 increased by 9% and constituted 135,307 tonnes of chicken meat compared to 123,931 tonnes in Q1 2017 as a result of significant increase of exports. Domestic sales volumes decreased by 4% year-on-year.
Poultry Exports
The Company continues to implement its strategy of targeting products to specific markets and export sales diversification.
The Dutch and the Slovenian processing plants and sales/distribution office in the UAE have been performing in accordance with expectations and their business plans.
In Q1 2018 MHP's exports of chicken meat constituted 63,144 tonnes, which is 28% higher than in the same period last year (Q1 2017: 49,151 tonnes), having exported its poultry to 53 countries worldwide. Export sales represented around 47% of total poultry sales volumes in Q1 2018.
During the reporting period, following its export strategy, the Company has been developing its exports mainly in the countries of the MENA and the EU.
Poultry Prices
The average chicken meat price through the first quarter of 2018 increased by 23% to UAH 38.78 per kg (excluding VAT) compared to the same period last year but around 5% lower than in Q4 2017. Due to the relatively stable currency ratio, average MHP's poultry prices in Q1 2018 increased by 22% year-on-year in USD term (almost in line with a growth in UAH term).
Price per 1 kg net of VAT | Q1 2018 | Q1 2017 | % change | |
Average Poultry Prices (UAH) | 38.78 | 31.52 | 23% |
* Average official FX rate for Q1 2018 UAH/US$ 27.3203 and for Q1 2017 UAH/US$ 27.0611
Exports prices increased by 17% year-on-year, mainly as a result of MHP's export product mix change and increased sales to more profitable markets (market targeting strategy). MHP's poultry prices on the domestic market remained almost at the same level as in Q4 2017, but 23% higher year-on-year due to low comparative basis in Q1 2017.
Oil Sales
Sales volume, tonnes | Q1 2018 | Q1 2017 | % change | |
Sunflower oil | 47,506 | 82,133 | -42% | |
Soybean oil | 18,255 | 7,780 | 135% |
In Q1 2018, MHP's sales of sunflower oil decreased to 47,506 tonnes compared to 82,745 tonnes in Q1 2017 as a result of delivery terms change from DAP to FOB. In Q1 2018, soybean oil export sales increased by 135% to 18,255 tonnes (including 6,000 tonnes of oil pushed back in Q4 2017) compared to 7,780 tonnes sold in Q1 2017.
The Company considers vegetable oils exports as one of the "natural hedge" routes accumulating additional hard currency revenues and protecting the Company from volatilities in local currency.
GRAIN GROWING OPERATIONS
Around 87,000 hectares of MHP's land are under winter crops (winter wheat, rapeseeds and barley), which is around 24% of land, which is going to harvested in 2018 (around 360,000 hectares). Currently, all crops are in good condition. MHP expects good harvest of winter crops in 2018.
MHP's 2018 spring sowing campaign is ongoing now with no significant change in crops structure.
OTHER AGRI OPERATIONS
Meat processing products | Q1 2018 | Q1 2017 | % change | |
Sales volume, third parties tonnes | 8,162 | 8,136 | 0% | |
Price per 1 kg net VAT, UAH | 58.66 | 44.38 | 32% | |
Convenience food | Q1 2018 | Q1 2017 | % change | |
Sales volume, third parties tonnes | 3,835 | 2,195 | 75% | |
Price per 1 kg net VAT, UAH | 46.51 | 41.39 | 12% |
Sales volumes of sausage and cooked meat in Q1 2018 remained stable and constituted 8,162 tonnes compared to 8,136 tonnes in Q1 2017. The average sausage and cooked meat price in Q1 2018 increased by 32% to UAH 58.66 per kg (excluding VAT) compared to UAH 44.38 in Q1 2017 mainly as a result of poultry price increase.
Sales volumes of convenience food in Q1 2018 increased by 75% reaching 3,835 tonnes. The average price in Q1 2018 increased by 12% to UAH 46.51 per kg (excluding VAT).
NEXT RELEASE
Financial results for Q1 2018 will be disclosed on 22 May 2018.
For investor relations enquiries Anastasiia Sobotiuk (Kyiv) |
+38 044 207 99 58 a.sobotyuk@mhp.com.ua |
For analyst enquiries Iryna Bublik (Kyiv) |
+38 044 207 00 04 i.bublik@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). As of the end of 2017, MHP's land ban constituted around 370,000 ha of land. 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 SE. Such statements do not guarantee that these are actions to be taken by MHP SE 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 SE does not intend to change these statements to reflect actual results.