REG - MHP SE - 2022 Integrated Annual Report
11/04/2023 07:00
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RNS Number : 7811V MHP SE 11 April 2023
11 April 2023, Limassol, Cyprus
MHP SE
Financial Results for the Fourth Quarter and Twelve Months ended 31 December
2022
MHP SE (LSE:MHPC), the parent company of a leading international food &
agrotech group with headquarters in Ukraine, today announces its audited
results for the fourth quarter and twelve months ended 31 December 2022.
Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "The
Company" or "The Group".
MHP today also publishes its first integrated Annual Report for 2022 (the
period ended 31 December 2022). You can find the Report following the link:
https://mhp.com.ua/en/mhp-se/financial-reports
(https://mhp.com.ua/en/mhp-se/financial-reports)
WAR IN UKRAINE
The war in Ukraine continues and may escalate further in the coming months.
There are ongoing risks to the Company's operations due to recurring attacks
on the critical infrastructure of Ukraine; however, as of today all MHP's
production facilities in Ukraine continue to operate at close to full
capacity. After transforming its logistics arrangements in response to
evolving wartime circumstances, the Company is again exporting to over 70
countries, providing grain, vegetable oils and poultry meat worldwide. The
Company's management and operational teams continually seek new ways to adjust
to the rapidly changing environment and to exploit opportunities that arise.
To date, MHP's own facilities have not sustained any physical damage as a
result of war. In the event of any adverse impact to its operations, the
Company has in place comprehensive contingency plans, ensuring that it is
ready to take any actions necessary to rebuild, restore and re-start
production in the shortest time possible.
The Group has incurred substantial war-related costs since the Russian
invasion on 24 February 2022. For the year ended 31 December 2022 these
amounted to US$ 69 million, including community support donations, write-offs
of inventories and biological assets, and other specific war-related expenses.
Working with volunteers, since the beginning of the War the Group has provided
extensive humanitarian aid, including the free supply of around 12,000 tonnes
of poultry products to the population of Ukraine.
OPERATIONAL HIGHLIGHTS
Q4 2022
· Poultry production volume in Ukraine decreased 10% y/y
to 181,583 tonnes (Q4 2021: 202,657 tonnes). Poultry production volumes for
the European Operating Segment (Perutnina Ptuj, "PP") increased by 11% to
31,147 tonnes (Q4 2021: 28,043 tonnes).
· MHP average chicken meat price increased by 6% to US$
1.87 per kg (Q4 2021: US$ 1.77 per kg) excluding VAT. The average price of
chicken meat produced by PP increased by 25% to EUR 3.38 per kg (Q4 2021:
EUR 2.70 per kg).
· Chicken meat export volumes from Ukraine increased by
6% to 111,130 tonnes (Q4 2021: 104,841 tonnes).
12M 2022
· Poultry production volume in Ukraine decreased by 8%
y/y to 697,071 tonnes (12M 2021: 754,387 tonnes). Poultry production volumes
for PP increased by 11% to 124,040 tonnes (12M 2021: 111,973 tonnes).
· MHP average chicken meat price increased by 17% y/y to
US$ 1.95 per kg (12M 2021: US$ 1.67 per kg) excluding VAT. The average price
of poultry meat produced by PP also increased by 25% to EUR 3.24 per kg (12M
2021: EUR 2.59 per kg).
· Chicken meat export volumes from Ukraine declined by 8%
y/y to 368,379 tonnes (12M 2021: 402,388 tonnes).
FINANCIAL HIGHLIGHTS
Q4 2022
· Revenue increased by 6% y/y to US$ 766 million, (Q4
2021: US$ 725 million).
· Export revenue of US$ 491 million, representing 64% of
total Group revenue (Q4 2021: US$ 422 million, 58% of total Group revenue).
· Operating profit of US$ 79 million, an decrease of 12%
y/y (Q4 2021: US$ 90); operating margin decreased to 10% (Q4 2021: 12%).
· Adjusted EBITDA (net of IFRS 16) decreased 16% y/y to
US$ 109 million (Q4 2021: US$ 129 million); adjusted EBITDA margin (net of
IFRS 16) decreased to 14% (Q4 2021: 18%).
· Net profit of US$ 38 million (Q4 2021: US$ 16 million).
12M 2022
· Revenue increased by 11% y/y to US$ 2,642 million (12M
2021: US$ 2,372 million).
· Export revenue increased by 26% y/y to US$ 1,601
million, representing 61% of total Group revenue (12M 2021: US$ 1,265 million,
53% of total Group revenue).
· Operating profit decreased to US$ 255 million, down by
49% y/y (12M 2021: US$ 503 million) and operating margin decreased from 21% to
10%.
· Adjusted EBITDA (net of IFRS 16) decreased by 41% y/y
to US$ 384 million (12M 2021: US$ 648 million); adjusted EBITDA margin (net
of IFRS 16) decreased from 27% to 15%.
· Net loss of US$ 231 million (12m 2021: profit of US$
393 million), primarily reflecting a US$ 365 million non-cash foreign exchange
loss in 12M 2022 (12M 2021: US$ 40 million foreign exchange gain).
FINANCIAL OVERVIEW
(in mln. US$, unless indicated otherwise) Q4 2022 Q4 2021 % change(1)) 12M 2022 12M 2021 % change(1))
Revenue 766 725 6% 2,642 2,372 11%
IAS 41 standard losses (9) 9 -200% (128) 185 -169%
Gross profit 210 172 22% 608 745 -18%
Gross profit margin 27% 24% 3 pps 23% 31% -8 pps
War-related expenses (24) - -100% (69) - -100%
Operating profit 79 90 -12% 255 503 -49%
Operating profit margin 10% 12% -2 pps 10% 21% -11 pps
Adjusted EBITDA 138 157 -12% 443 709 -38%
Adjusted EBITDA margin 18% 22% -4 pps 17% 30% -13 pps
Adjusted EBITDA (net of IFRS 16) 109 129 -16% 384 648 -41%
Adjusted EBITDA margin (net of IFRS 16) 14% 18% -4 pps 15% 27% -12 pps
Net profit /(loss) 38 16 138% (231) 393 -159%
Net profit/(loss) margin 5% 2% 3 pps -9% 17% -26 pps
(1)) pps - percentage points
Average official FX rate for Q4: UAH/US$ 36.57 in 2022 and UAH/US$ 26.68 in
2021.
Average official FX rate for 12M 2022 UAH/US$ 32.37 and UAH/US$ 27.28 for 12M
2021.
DIAL-IN DETAILS
MHP's management will host a conference call for investors and analysts
followed by Q&A on the day of the results.
The dial-in details are:
Time: 14.00 London / 16.00
Kyiv / 09.00 New York
Title: Financial results
for Q4 and 12M 2022
UK: +44 203 984 9844
Ukraine: +380 89 324 0624
USA: +1 718 866 4614
PIN code: 645982
To follow the presentation with the management team, please use the following
link:
https://mm.closir.com/slides?id=645982
(https://mm.closir.com/slides?id=645982)
For Investor Relations enquiries, please contact:
Anastasia Sobotiuk (Kyiv) +38 050 339
29 99
+357 99 76 71 26
a.sobotyuk@mhp.com.ua (mailto:a.sobotyuk@mhp.com.ua)
Segment Performance
Poultry and Related Operations Segment
Q4 2022 Q4 2021 % change y/y Q3 2022 % change q/q 12M 2022 12M 2021 % change
Poultry
Sales volume(1)), third party tonnes 188,907 180,028 5% 177,387 6% 665,975 704,010 -5%
Export sales volume, tonnes 111,130 104,841 6% 99,250 12% 368,379 402,388 -8%
Domestic sales volume, tonnes 77,777 75,187 3% 78,137 0% 297,596 301,622 -1%
Portion of export sales, % 59% 58% 2% 56% 5% 55% 57% -4%
Average price per 1 kg net of VAT, USD 1.87 1.77 6% 2.00 -6% 1.95 1.67 17%
Average price per 1 kg net of VAT, UAH (Ukraine) 48.80 46.76 4% 47.30 3% 47.01 45.37 4%
Average price per 1 kg net of VAT, US$ (Ukraine) 1.33 1.75 -24% 1.35 -1% 1.45 1.66 -13%
Average price per 1 kg net of VAT, US$ (export) 2.22 1.77 25% 2.49 -11% 2.33 1.67 40%
Sunflower oil
Sales volume, tonnes 95,895 79,480 21% 95,436 0% 272,807 207,240 32%
Soybeans oil
Sales volume, tonnes 13,583 9,622 41% 7,716 76% 40,845 45,209 -10%
(1)) Total poultry sales include domestic sales, export sales and sales of
culinary products; data for 2021 has been adjusted accordingly to this
approach
Chicken meat
The total volume of chicken meat sold to third parties in 12M 2022 decreased
by 5% to 665,975 tonnes (12M 2021: 704,010 tonnes) mainly due to logistical
challenges for export sales and lower demand in Ukraine due to the effects of
the War.
Poultry exports in Q4 2022 increased by 6% y/y and by 12% q/q mainly driven by
an intentional decrease of poultry stocks in non-resident warehouses, which
have been accumulated in significant volumes during 2022 to secure stable
export contracts taking into account logistics challenges driven by the War in
Ukraine. Poultry export prices in Q4 2022 increased by 25% y/y, mainly driven
by product mix optimisation of sales as well as by substantial international
price increases across all markets (particularly fillet prices in the EU and
MENA and small bird prices in the MENA region).
Driven by War-related news and challenges as well as by seasonality, in Q2
2022, poultry prices increased significantly. However, from September 2022,
due to changes in the economic environment in the EU and UK and increased
competition in the MENA region poultry prices across all export markets (MENA,
EU and CIS) from September 2022 started to decline sharply, which resulted in
an 11% q/q decrease in price in Q4. Current prices remain substantially lower
than in Q3 2022. Moreover, MHP has, since March 2022, been facing significant
y/y increase in its export logistic cost, unlike our international competitors
which have considerably lower logistics costs.
In Q4 2022 poultry prices in the domestic market (US$ terms) decreased by 24%
y/y, and by 1% q/q, predominantly driven by the significant depreciation of
the UAH. In UAH terms, in Q4 2022, poultry prices remained stable y/y, while
slightly increasing q/q.
Vegetable oil
In Q4 2022, sunflower oil sales volumes amounted to 95,895 tonnes, up 21% y/y.
For the 12M 2022, MHP's sales of sunflower oil increased by 32% to 272,807
tonnes (12M 2021: 207,240 tonnes), mainly driven by an increase in production
of sunflower cake (a change in the recipe), which was substantially lower in
Q4 2021 ( when the fodder recipe was based more on soyabean cake) as well as
positive changes (in logistic with faster ships turnaround).
Sales of soybean oil were 13,583 tonnes in Q4 2022, 41% higher y/y, and 40,845
tonnes in 12M 2022, 10% lower y/y, mainly as a result of lower production
volumes of soyabean cake required for the fodder recipe substituted by
sunflower cake since Q2 2022, and challenges associated with export logistics
because of the War in Ukraine.
Financial result and trends
(in mln. US$, unless indicated otherwise) Q4 2022 Q4 2021 % change y/y(1)) Q3 2022 % change q/q(1)) 12M 2022 12M 2021 % change(1))
Revenue 537 467 15% 541 -1% 1,887 1,607 17%
- Poultry and other 382 357 7% 392 -3% 1,425 1,305 9%
- Vegetable oil 155 110 41% 149 4% 462 302 53%
IAS 41 standard gain (11) 7 -257% 9 -222% 13 14 -7%
Gross profit 123 66 86% 105 17% 375 285 32%
Gross margin 23% 14% 9 pps 19% 4 pps 20% 18% 2 pps
War-related expenses (3) - -100% (4) 23% (38) - -100%
Adjusted EBITDA 86 57 51% 84 2% 270 267 1%
Adjusted EBITDA margin 16% 12% 4 pps 16% 0 pps 14% 17% -3 pps
Adjusted EBITDA per 1 kg (net of IAS 41) 0.51 0.28 82% 0.42 21% 0.39 0.36 8%
(1)) pps - percentage points
In 12M 2022, revenue increased by 17% y/y driven by price increases in export
markets, and partly offset by lower sales volumes of meat. A 15% q/q increase
of revenue in Q4 2022 was primary attributable to a substantial increase in
sales volumes of vegetable oil due to the change in fodder recipe.
IAS 41 standard loss in Q4 2022 amounted to US$ 11 million mainly due to a
downward trend in export prices which continued during Q1 2022 and which
resulted in a lower revaluation of chicken meat held on stock abroad.
Gross profit for 12M 2022 increased by 32% y/y to US$ 375 million. The
increase was mainly driven by an increase in the price of chicken meat and a
higher sales volume and price of sunflower oil.
In 12M 2022, adjusted EBITDA remained unchanged y/y, mainly due to the impact
of War-related expenses (including donations, damages and asset write-offs)
which offset the price increases in export markets. The increase in Adjusted
EBITDA in Q4 2022 compared to the same period last year is mainly related to
the increased export price and sales volumes.
Grain Growing Segment
In 2022 MHP harvested around 341,000 hectares of land in Ukraine and gathered
around 1.9 million tonnes of crops, 26% less than in 2021, mainly due to
unfavorable weather condition during the summer and the harvesting season in
autumn. MHP's average yields remain well above the average for Ukraine for all
crops due to operational efficiency and employment of best practices.
Harvest results
2022 ( 1 ) 2021 ( 1 )
Production volume Cropped Production volume Cropped
land land
in tonnes in hectares in tonnes in hectares
Corn 1,088,476 151,850 1,624,173 163,295
Wheat 224,391 40,711 216,007 36,773
Sunflower 159,357 62,585 279,822 88,256
Rapeseed 104,849 27,520 71,055 21,522
Soya 109,240 44,953 57,208 22,879
Other ( 2 ) 248,334 13,129 348,590 18,715
Total 1,934,647 340,748 2,596,855 351,440
( 1 ) Only land of Grain Growing Segment;
( 2 ) Including barley, rye, sugar beet, sorghum and other and excluding
land left fallow as part of crop rotation;
Yields
2022 2021
MHP's Ukraine's average( 1 ) MHP's Ukraine's average( 1 )
average( 1 ) average( 1 )
tonnes per hectare tonnes per hectare
Corn 7.2 6.6 10.0 8.0
Wheat 5.5 4.1 5.9 4.6
Sunflower 2.5 2.2 3.2 2.5
Rapeseed 3.8 2.9 3.3 3.0
Soya 2.4 2.4 2.5 2.7
(1) MHP yields are net weight, Ukraine yields are bunker weight.)
Financial result and trends
(in mln. US unless indicated otherwise) 12M 2022 12M 2021 % change
Revenue 158 188 -16%
IAS 41 standard gain/(loss) (142) 169 -184%
Gross profit 105 336 -69%
War-related expenses (6) - -100%
Adjusted EBITDA 150 397 -62%
Adjusted EBITDA (net of IFRS 16) 93 338 -72%
Adjusted EBITDA (net of IFRS 16) per 1 hectare 273 962 -72%
The Grain Growing Segment's revenue for 12M 2022 was US$ 158 million (12M
2021: US$ 188 million). The 16% y/y decrease was mainly attributable to the
lower volumes sold, as a result of the late finishing of the harvesting
campaign and lower yields of corn, sunflower and wheat.
IAS 41 standard loss in 12M 2022 was US$ 142 million (12M2021: a gain of US$
169 million), with the loss representing the net effect of the revaluation of
agricultural produce (sunflower, corn, wheat and soya), as well as a
revaluation of fields due to lower expected results from winter crops.
12M 2022 Adjusted EBITDA (net of IFRS 16) of the Segment decreased by 72%
year-on-year, mainly due to the weaker harvest in 2022 compared to the one in
2021, as well as higher grain production costs due to increased prices for
main raw materials.
Meat Processing and Other Agricultural Segment
Meat processing products Q4 2022 Q4 2021 % change y/y Q3 2022 % change q/q 12M 2022 12M 2021 % change
Sales volume, third party tonnes 2,872 8,507 -66% 3,108 -8% 14,284 33,954 -58%
Price per 1 kg net VAT, UAH 123.68 88.29 40% 106.27 16% 99.06 82.20 21%
Sales volumes of meat processing products decreased by 58% y/y to 14,284
tonnes in 12M 2022 (12M 2021: 33,954 tonnes) driven by War-related challenges
that resulted in the temporary suspension of production facilities at
"Ukrainian Bacon" in the Donetsk region and the subsequent partial
redeployment of its operations to Central Ukraine. The average price increased
by 21% y/y to UAH 99.06 per kg in 12M 2022, driven mainly by an increase in
raw material prices (spices, packaging and other components).
Convenience food Q4 2022 Q4 2021 % change y/y Q3 2022 % change q/q 12M 2022 12M 2021 % change
Sales volume, third party tonnes 5,327 4,750 12% 5,421 -2% 18,159 18,857 -4%
Price per 1 kg net VAT, UAH 70.05 52.58 33% 61.91 13% 61.90 48.62 27%
Sales volumes of convenience food in 12M 2022 decreased by 4% to 18,159 tonnes
(12M 2021: 18,857 tonnes), mainly driven by significant disruptions in HoReCa
(both KFC and McDonalds temporarily ceased its operations in Ukraine in Q2
2022 because of the War). The average price in 12M 2022 increased by 27% to
UAH 61.90 per kg (excluding VAT) mainly driven by raw material price increases
as well as a focus on increased sales of higher-margin products.
Financial result and trends
(in mln. US$, except margin data) Q4 2022 Q4 2021 % change y/y(1)) Q3 2022 % change q/q(1)) 12M 2022 12M 2021 % change
Revenue 39 49 -20% 32 22% 134 176 -24%
- Meat processing and convenience food 30 40 -25% 24 25% 102 143 -29%
- Other(2)) 9 9 0% 8 13% 32 33 -3%
IAS 41 standard losses (2) (4) 50% - -100% (1) (1) 0%
Gross profit 4 - 100% 5 -20% 15 17 -12%
Gross margin 10% 0% 10 pps 16% -6 pps 11% 10% 1 pps
War-related expenses (1) - -100% - -100% (5) - -100%
Adjusted EBITDA 4 (1) -500% 4 0% 8 11 -24%
Adjusted EBITDA margin 10% -2% 12 pps 13% -3 pps 6% 6% 0 pps
(1)) pps - percentage points;
(2)) includes milk, cattle and feed grains.
The Segment's 12M 2022 revenue decreased by 24% y/y to US$ 134 million.
Adjusted 12M 2022 EBITDA was US$ 8 million (12M 2021: US$ 11 million),
mainly due to the effects of the War and significant disruptions in demand for
HoReCa segment.
European Operating Segment (PP)
Poultry Q4 2022 Q4 2021 % change y/y Q3 2022 % change q/q 12M 2022 12M 2021 % change y/y
Sales volume, third party tonnes 19,141 17,924 7% 21,263 -10% 77,766 72,841 7%
Price per 1 kg net VAT, EUR 3.38 2.70 25% 3.34 1% 3.24 2.59 25%
In Q4 2022, poultry sales volumes of the European Operating Segment increased
by 7% y/y to 19,141 tonnes, while decreasing by 10% q/q. This was driven by an
increased production of chicken meat following the expansion of facilities in
Croatia and Serbia. The average price of chicken meat increased by 25% y/y in
Q4 2022 to EUR 3.38 (Q4 2021: EUR 2.70).
Meat processing products(1)) Q4 2022 Q4 2021 % change y/y Q3 2022 % change q/q 12M 2022 12M 2021 % change y/y
Sales volume, third party tonnes 11,162 10,321 8% 11,960 -7% 43,277 40,366 7%
Price per 1 kg net VAT, EUR 3.19 2.83 13% 3.11 3% 3.09 2.78 11%
(1)) includes sausages and convenience foods
Meat processing product sales at the European Operating Segments increased by
8% y/y to 11,162 tonnes in Q4 2022 (Q4 2021: 10,321 tonnes), but decreased 7%
when compared with Q3. The average price of meat processing products in Q4
2022 increased by 13% to EUR 3.19.
Financial result and trends
(in mln. US$, except margin data) Q4 2022 Q4 2021 % change y/y(1)) Q3 2022 % change q/q(1)) 12M 2022 12M 2021 % change y/y
Revenue 118 100 18% 121 -2% 464 401 16%
IAS 41 standard gains (2) 2 -200% (1) -100% 2 3 -33%
Gross profit 23 21 10% 29 -21% 113 106 7%
Gross margin 19% 21% -2 pps 24% -5 pps 24% 26% -2 pps
Adjusted EBITDA 7 13 -46% 21 -67% 65 66 -2%
Adjusted EBITDA margin 6% 13% -7 pps 17% -11 pps 14% 16% -2 pps
Adjusted EBITDA (net of IFRS 16) 7 13 -46% 20 -65% 63 63 0%
Adjusted EBITDA margin 6% 13% -7 pps 17% -11 pps 14% 16% -2 pps
(net of IFRS 16)
(1)) pps - percentage points.
The European Operating Segment's revenue for 12M 2022 increased by 16% to US$
464 million (12M 2021: US$ 401 million), mainly driven by an increase in
poultry sales volumes and prices.
12M 2022 adjusted EBITDA (net of IFRS 16) was flat y/y at US$ 63 million (12M
2021: US$ 63 million), with the adjusted EBITDA margin (net of IFRS 16)
declining from 16% to 14%.
Current Group cash flow
(in mln. US$) Q4 2022 Q4 2021 12M 2022 12M 2021
Cash from operations 101 91 479 370
Change in working capital (93) (224) (341) (245)
Net Cash from operating activities 8 (133) 138 125
Cash used in investing activities (49) (3) (174) (100)
Including:
CAPEX(1)) (54) (51) (160) (143)
Cash from financing activities 14 130 57 35
Total change in cash(2)) (27) (6) 21 60
(1))Calculated as cash used for purchases of property, plant and equipment
plus cash used for purchases of other non-current assets.
(2))Calculated as net cash from operating activities plus cash used in
investing activities plus cash used in financing activities.
Cash flow from operations for 12M 2022 amounted to US$ 479 million (12M 2021:
US$ 370 million). Higher cash generation compared to EBITDA is mainly
attributable to a non-cash IAS 41 gain/(loss) on revaluation of crops that
will be realized the next year (in 2023). Despite an increase in сash
obtained from operations, MHP needed to invest it in working capital.
Investment in working capital are mostly related to:
· An increase in trade accounts receivable for sunflower oil due to
longer settlement periods as a result of increased delivery periods;
· Lower advances received for grains and meat; and
· Higher volumes of oils as at the end of 2022 designated for sale
as well as increased investments in fertilizers and fuel before the spring
sowing campaign.
In 12M 2022 total CAPEX was 12% higher compared to 2021 and amounted to US$
160 million. The increase in CAPEX year-on-year is mainly attributable to the
expansion of operations and modernization of Perutnina Ptuj production
facilities (including facilities for environmental friendly production and
compliance) as well as the War-resilience CAPEX (barges to facilitate exports,
diesel generators etc).
Debt Structure and Liquidity
(in mln. US$) 31 December 2022 30 September 2022 31 December 2021
Total Debt(1) 2)) 1,537 1,503 1,505
LT Debt(1)) 1,507 1,480 1,489
ST Debt (1)) 182 168 126
Trade credit facilities(2)) (152) (145) (110)
Cash and bank deposits (300) (317) (275)
Net Debt(1)) 1,237 1,186 1,230
LTM Adjusted EBITDA(1)) 384 404 648
Net Debt / LTM Adjusted EBITDA(1)) 3.22 2.94 1.90
(1) ) Net of IFRS 16 adjustments: as if any lease that would have been
treated as an operating lease under IAS 17 as was in effect before the 1
January 2019, is treated as an operating lease for the purposes of this
calculation. In accordance with covenants in MHP's bond and loan agreements,
these data exclude the effects of IFRS 16 on accounting for operating leases.
(2)) Indebtedness under trade credit facilities that is required to be
repaid within 12 months of drawdown should be excluded for the purposes of
this calculation
As of 31 December 2022, the share of long-term debt in the total outstanding
debt remained unchanged at 98%.
As of 31 December 2022, MHP's cash and cash equivalents amounted to US$ 300
million. Net debt remained broadly stable y/y at US$ 1,237 million, compared
to US$ 1,230 million as at 31 December 2021, but increased compared to US$
1,186 as at 30 September 2022.
The Net Debt / LTM adjusted EBITDA (net of IFRS 16) ratio was 3.22 as of 31
December 2022, higher than the limit of 3.0 defined in the Eurobond agreement.
To reiterate the principles underlying its approach to balance sheet structure
and funding mix, the Company remains committed to maintaining a robust
liquidity position as well as sustainable debt leverage.
The Company's debt management strategy extends to both its private and public
debt instruments. While the Company's bond, loan and revolving credit
facilities remain largely unchanged from before the War, the Company expects
to manage its debt portfolio proactively in response to evolving market
conditions subject to the NBU restrictions.
Currency Risk
As a hedge for currency risks, revenue from the exports of grain, sunflower
and soybean oil, sunflower husks and chicken meat which, are denominated in US
Dollars and Euros, are more than sufficient to cover debt service expenses.
Export revenue for 12M 2022 amounted to US$ 1,601 million or 61% of total
revenue (US$ 1,265 million or 53% of total sales in 12M 2021).
Dividends
Taking into account the current risks and uncertainties following the Russian
invasion of Ukraine, and the resulting need to preserve liquidity to support
the Company's ongoing business operations and to help sustain the population
of the country, the Board of MHP has decided that no dividend are likely to be
paid for as long as the War continues.
Subsequent Events
Facility agreement with the EBRD
In February 2023, the Group entered into a facility agreement with the
European Bank for Reconstruction and Development (EBRD) in the amount of US$
100 million (EBRD - US$ 90 million and a third party lender - US$ 10 million).
The loan is for the purposes of financing the needs of the Poultry and Related
Operations Segment. It is a seasonal loan, secured by sunflower seeds and oil
stocks, with maturity in August 2023, and will be used to finance the purchase
of sunflower seeds and other operational expenses associated with production
of sunflower oil and related products. The loan includes a number of covenants
and other terms and conditions, including a requirement that the Group
maintain certain financial ratios consistent with those in the Group's
Eurobond agreements. The loan also contains a number of reporting
requirements.
Appointment of a new Non-Executive Director
Mr. Oscar Chemerinski was appointed as an Independent Non-Executive Director
at the EGM held on 7 March 2023. On 04 April 2023, the Board appointed Mr.
Chemerinski to become a member of the Sustainability & International
Committee and a member of the Audit & Risk Committee.
Outlook
In Q1 2023, the Group was successful in maintaining operations at close to
full capacity.
As the overall situation in Ukraine continues to be fluid, we are unable to
provide any meaningful guidance as to the outlook for the Poultry segment for
the 2023 full year. In the Grain growing segment, the Spring sowing campaign
will start this month. With all our land located outside war zones, we are
hopeful that we will be able to harvest the same 360,000 hectares as in 2022.
Notes to Editors:
About MHP
MHP SE is the parent company of a leading international food & agrotech
group with headquarters in Ukraine and also in the Balkans (Perutnina Ptuj
Group).
Ukraine: MHP has the greatest market share and the 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
nine 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.
The Balkans: Perutnina Ptuj is a leading poultry and meat-processing producer
in the Balkans, has production assets in four Balkan countries: Slovenia,
Croatia, Serbia, Bosnia and Herzegovina; owns distribution companies in
Austria, Macedonia and Romania and supply products to 15 countries in Europe.
Perutnina Ptuj is a vertically integrated company across all states of chicken
meat production - feed, hatching eggs production and hatching, breeding,
slaughtering, sausages and further poultry processing production.
MHP trades on the London Stock Exchange under the ticker symbol MHPC since
2008.
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.
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