Mhp Reg S Regulatory News (MHPC)

PRESS RELEASE25 January 2018, Cyprus

MHP SE

PRE-CLOSE TRADING UPDATE FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED 31 DECEMBER 2017

MHP SE (LSE: MHPC), the parent company of one of the leading agro-industrial companies in Ukraine with a focus on 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 fourth quarter and twelve months ended 31 December 2017. 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 period.

Poultry production volumes in Q4 2017 decreased by 1% and constituted 141,544 tonnes (Q4 2016: 148,245 tonnes) and in 12M 2017 remained relatively stable at 566,242 tonnes (12M 2016: 574,328 tonnes).

In Q4 2017 poultry sales volumes decreased by 13% to 113,746 tonnes mainly as a result of significant stock decrease and growth of exports in H1 2017.

Annual sales of chicken meat remained relatively stable at 532,727 tonnes. Sales of fresh chicken remained relatively stable, while sales of frozen chicken meat both on the domestic market and for exports decreased. The decreased in sales on the Ukrainian market was offset by an increase in exports.

Poultry Exports

In Q4 2017 the volume of chicken meat exports totaled 45,042 tonnes and relatively stable year-on-year. During 12M 2017, poultry exports increased by 16% compared to 12M 2016 and reached 220,983 tonnes, following the strategy of poultry stocks decrease and driven by significant exports in H1 2017. MHP continued to follow a strategy of both geographic diversification and a product mix optimization building-up its export volumes of chicken meat mainly in the EU and MENA countries. Out of total poultry sales volumes, poultry exports in 12M 2017 constituted around 41% vs 36% in 12M 2016.

The Dutch and Slovakian processing plants and sales/distribution office in the UAE have been performing in accordance with expectations and their business plans.

Poultry Prices

* Average official FX rate for Q4 2017 UAH/US$ 26.96 and for Q4 2016 UAH/US$ 25.89

 Average official FX rate for 12M 2017 UAH/US$ 26.59 and for 12M 2016 UAH/US$ 25.55

Through the fourth quarter of 2017 the average chicken meat price (both domestic and export) constituted UAH 40.71 per 1 kg of natural weight (excluding VAT), increased by 34% year-on-year and by 7% compared to Q3 2017. In 12M 2017 average chicken meat price was UAH 35.63, which is 25% higher than in 12M 2016. The increase in price year-over-year is mainly driven by export price growth as a result of product mix optimization undertaken by the Company in line with its export strategy.

In USD term, average MHP's poultry prices in Q4 2017 increased by 29% year-on-year and in 12M 2017 increased by 21% year-on-year.

Vegetable Oils

In Q4 2017, MHP's sales of sunflower oil decreased by 23% to 67,569 tonnes compared to 88,201 tonnes in Q4 2016, mainly due to decrease in production of oil (driven by decrease in production of fodder) as well the increased oil content in sunflower cake and improvement in conversion ratio (kg of grains per kg of bird). In 12M 2017 sunflower oil exports constituted 311,393 tonnes, which is 9% lower year-over-year.

In Q4 2017, soybean oil export sales were at 9,809 tonnes, 52% lower year-on-year, and accumulatively for 12M 2017- 27,282 tonnes, 20% lower year-on-year as a result of the push back of the contract for approx. 6,000 tonnes of oil to January 2018. MHP also sells soybean cake to third parties.

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

In 2017 the Company harvested 356,080 hectares of land and gathered 1,999,095 tonnes of crops, which is around 15% lower than in 2016 mainly due to challenging weather conditions, which adversely affected MHP yields across all crops.

In 2018 sowing campaign, MHP has around 86,570 ha under winter crops, of which around 56% is sowed with winter wheat and 35% with winter rapeseeds. All winter crops are in good conditions.

[1] Only land of grain growing segment;

 [2] Including barley, rye, sugar beet, sorghum and other crops and excluding land left fallow as part of crop rotation.

* - Tonnes per hectare

** - MHP yields are net weight, Ukraine - bunker weight

 OTHER AGRI OPERATIONS

In 12M 2017 sausage and cooked meat sales volumes increased by 6% to 35,899 tonnes as a result of a product promotion strategy and advertisement campaign both for the product range and for the brand.

Average sausage and cooked meat prices during the fourth quarter of 2017 increased by 28% to UAH 56.07 per kg excluding VAT and in 12M 2017 the average price increased by 16% to UAH 49.17 per kg excluding VAT.

NEXT RELEASE

The financial results for Q4 and 12M 2017 will be published on 14 March 2018. 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 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.