Last checked at 1 Feb 2010 07:00
PRESS RELEASE
February 1, 2010, Kyiv, Ukraine
MHP S.A. Pre-close trading update for the year ended 31 December 2009
Poultry and Poultry Related Operations
In 2009, MHP's poultry and poultry related operations segment performed strongly despite the challenging economic conditions in Ukraine. During the year the Company increased its monthly poultry production volumes and sales by almost 50% compared to the end of 2008 due to the launch of phase two of the Myronivka poultry farm, the Company's new state-of-the-art production facility.
During the fourth quarter of 2009 the volume of chicken meat sales to third parties increased by 50.7% compared to the fourth quarter of 2008, reaching 80,000 tonnes.Full year volumes increased by 26.9% to 272,900 tonnes. The volume growth was primarily a result of the launch of phase two of the Myronivka poultry farm. All the Company's existing poultry production facilities operated at their full production capacity during the year. During the fourth quarter of 2009, consumer demand for chicken remained high as 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 through the fourth quarter of 2009 increased by 6.6% to 12.37 UAH per kg. of adjusted weight (excluding VAT) when compared to the fourth quarter of 2008. For the full year 2009 prices increased by 6.4% to 12.79 UAH per kg. against 2008.
Poultry production costs in Q4 2009 were higher in UAH compared to Q4 2008 due to the increase in the market price of corn, which the Company uses to calculate its costs. However, due to the Company's 100% self sufficiency in corn and its high level of vertical integration, the higher corn prices in Q4 2009 will have a positive effect on the financial performance of the Company's Grain Growing segment.
Following the opening of MHP's new sunflower crushing plant at its Katerynopilsky facility in Ukraine in September 2009, 140,400 tonnes of sunflower oil was produced in the full year 2009, compared to 93,900 tonnes in the full year 2008. All of the sunflower oil produced was sold to external customers at an average price of US$ 717 per tonne (2008: US$ 1,179).
In Q4 2009, 49,000 tonnes were produced and sold at an average price of US$ 758 per tonne (Q4 2008: US $870). The opening of the new sunflower crushing plant enabled MHP to produce 50% more sunflower oil in Q4 2009 compared to Q3 2009.
Grain Cultivation and Storage
MHP produced a good harvest in 2009 with the yields of crops per hectare significantly higher than Ukraine's average, which overall produced a high yield of crops.
|
| 2009 MHP's average | 2009 Ukraine's average | 2008 MHP's average | 2008 Ukraine's average |
| (tonnes per hectare) | (tonnes per hectare) | (tonnes per hectare) | (tonnes per hectare) | |
| Rapeseed | 2.7 | 1.9* | 3.5 | 1.8* |
| Wheat | 5.8 | 3.1* | 6.3 | 3.8* |
| Sunflower | 3.3 | 1.5* | 2.8 | 1.5* |
| Corn | 9.0 | 5.0* | 7.0 | 4.2* |
* - Source: the State Committee on Statistics of Ukraine.
The Company used forward export contracts for the sale of rapeseed and approximately 50% of its wheat. MHP's export grain sales are an additional source of foreign currency income accounting in 2009 for US$ 30 million.
Due to the strong performance of the Grain Growing segment, management decided to increase MHP's land bank.
Other Agricultural Operations
For the full year 2009, sausage and cooked meat production volumes increased by 53.8% to 24,600 tonnes compared to 16,000 tonnes in 2008. Q4 2009 sausage and cooked meat production volumes increased by 20.8% to 6,400 tonnes compared to 5,300 tonnes during Q4 2008.
Average sausage and cooked meat prices during 2009 decreased by 5.0% to 17.33 UAH per kg excluding VAT (FY 2008: 18.23 UAH per kg.) in line with consumer demand and the Company's strategy of shifting its product portfolio towards mass market products. The average price in Q4 2009 remained at the same level as in Q4 2008. MHP is a market leader in meat processing in Ukraine and management expects further increases in its market share.
The financial results for Q4 2009 and full year 2009 will be announced in April, 2010. The Company will provide the exact date of publication and conference call details in due course.
For further information please contact:
| Financial Dynamics Ben Foster (London) Marc Cohen (London) Leonid Solovyev (Moscow)
For Investor Relations enquiries Anastasiya Sobotyuk (Kyiv)
|
London: +44 20 7831 3113
Moscow: +7 495 795 06 23
Kyiv: +38 044 207 99 58 a.sobotyuk@mhp.com.ua |
Notes to Editors:
About MHP
MHP was admitted to the Official List of the London Stock Exchange in May 2008. It is the leading producer of poultry products in Ukraine, with a 2009 market share for industrially produced chicken meat of more than 40%, according to preliminary data of the State Committee on Statistics of Ukraine. It's "Nasha Ryaba" brand is the market leader, whilst MHP also has several other national and regional brands for processed meat products.
MHP is fully vertically integrated owning and operating 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 bio-security and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale.
MHP also has an important and expanding grain operation, producing and selling sunflower oil as a by-product of its fodder production. MHP also produces and sells beef, sausages, cooked meats convenience food products, goose meat, foie gras and fruit.