REG - MHP SE - Financial Results for the Q4 and 12M 2021
05/05/2022 11:00
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RNS Number : 4629K MHP SE 05 May 2022
05 May 2022, Limassol, Cyprus
MHP SE
Financial Results for the Fourth Quarter and Twelve Months Ended 31 December
2021
MHP SE (LSE:MHPC), the parent company of a leading international
agro-industrial group with headquarters in Ukraine, today announces its
results for the fourth quarter and twelve months ended 31 December 2021.
Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "the
Company" or "the Group".
Results of Perutnina Ptuj (PP) are included in the Group's results of
activities and are shown separately (European Operating Segment).
Starting from the publication of its financial results for Q1 2021, MHP shows
relevant comparisons of results not only year-on-year, but also to the
preceding period. Accordingly, Q4 2021 results in Poultry, Meat Processing and
European Operating segments are compared not only with Q4 2020, but also with
Q3 2021. For Grain Growing Operations, where results are driven by seasonality
effects, this comparison is not relevant.
MHP today also publishes its full version of Annual Report for 2021 (the
period ended 31 December 2021). You can find the document following the link:
https://mhp.com.ua/en/mhp-se/annual-reports
(https://mhp.com.ua/en/mhp-se/annual-reports)
OPERATIONAL HIGHLIGHTS
Q4 2021
· Poultry production volumes for MHP excluding PP reached
202,657* tonnes, increased by 7% year-on-year (Q4 2020: 189,687 tonnes).
Poultry production volumes of the European Operating Segment (PP) increased by
14% to 28,043 tonnes (Q4 2020: 24,583 tonnes).
· The average chicken meat price increased by 30% year-on-year
and constituted to USD 1.77 per kg (Q4 2020: USD 1.36 per kg) (excluding VAT).
The average price of chicken meat produced by PP during Q4 2020 increased
compared to Q4 2020 from EUR 2.48 to EUR 2.70 per kg.
· Chicken meat exports from Ukraine totaled 104,841 tonnes
(excluding PP's 8,570 tonnes) increased by 11% for MHP (Q4 2020: 94,709
tonnes) and PP's exports more than doubled (Q4 2020: 4,083 tonnes).
12M 2021
· Poultry production volumes for MHP increased by 3% to 754,387*
tonnes (12M 2019: 731,279 tonnes). Poultry production volumes of the European
Operating Segment increased 10% to 111,973 tonnes (2020: 102,157 tonnes).
· The average chicken meat price increased by 25% year-on-year to
USD 1.67 per kg (12M 2020: USD 1.34 per kg) (excluding VAT). The average
price of chicken meat produced by PP during 2021 was EUR 2.59 per kg.
· Chicken meat exports from Ukraine increased by 8% year-on-year
to 402,388 tonnes (12M 2020: 373,734 tonnes) while PP's exports were up 97% to
33,446 tonnes (12M 2020: 17,001 tonnes).
*- production volume of chicken meat only without by-products
FINANCIAL HIGHLIGHTS
Q4 2021
· Revenue of US$ 725 million, an increase of 46% year-on-year (Q4
2020: US$ 497 million).
· Export revenue amounted to US$ 422 million, 58% of total
revenue (Q4 2020: US$ 316 million, 64% of total revenue).
· Operating profit increased to US$ 90 million from US$ 7
million; operating margin increased from 1% to 12%.
· Adjusted EBITDA margin (net of IFRS 16) increased to 18%;
adjusted EBITDA (net of IFRS 16) of US$ 129 million was up 239% year-on-year
(Q4 2020: US$ 38 million).
· Net gain for the period was US$ 16 million (Q4 2020: US$ 24
million of loss).
12M 2021
· Revenue of US$ 2,372 million, an increase of 24% year-on-year
(12M 2020: US$ 1,911 million) mainly driven by an increase in the sale of
meat.
· Export revenue amounted to US$ 1,265 million, 53% of total
revenue (12M 2020: US$ 1,016 million, 53% of total revenue), up 25%
year-on-year.
· Operating profit of US$ 506 million, up 152% year-on-year from
US$ 201 million: operating margin raised from 11% to 21%.
· Adjusted EBITDA margin (net of IFRS 16) grown to 27%; adjusted
EBITDA (net of IFRS 16) increased to US$ 648 million (12M 2020: US$ 340
million) driven mainly by strong result grain growing segment.
· Net profit for the year was US$ 393 million, compared to a net
loss of US$ 133 million for 12M 2020. Net profit before foreign exchange
differences was US$ 353 million, 397% higher than US$ 71 million for 12M 2020.
FINANCIAL OVERVIEW
(in mln. US$, unless indicated otherwise) Q4 2021 Q4 2020 % change(1)) 12M 2021 12M 2020 % change(1))
Revenue 725 497 46% 2,372 1,911 24%
IAS 41 standard gains/(losses) 9 2 350% 185 31 497%
Gross profit 172 76 126% 745 398 87%
Gross profit margin 24% 15% 9 pps 31% 21% 10 pps
Operating profit/(loss) 90 7 1186% 506 201 152%
Operating profit margin 12% 1% 11 pps 21% 11% 10 pps
Adjusted EBITDA 157 63 149% 709 395 79%
Adjusted EBITDA margin 22% 13% 9 pps 30% 21% 9 pps
Adjusted EBITDA (net of IFRS 16) 129 38 239% 648 340 91%
Adjusted EBITDA margin (net of IFRS 16) 18% 8% 10 pps 27% 18% 9 pps
Net profit/(loss) before foreign exchange differences 51 (10) 610% 353 71 397%
Net profit/(loss) margin before forex gain/(loss) 7% -2% 9 pps 15% 4% 11 pps
Foreign exchange gain/(loss) (35) (13) 169% 40 (204) 120%
Net profit (loss) 16 (24) (24) 167% 393 -133 395%
Net profit (loss) margin 2% -5% 7 pps 17% -7% 24 pps
(1)) pps - percentage points
Average official FX rate for Q4: UAH/US$ 26.6806 in 2021 and UAH/US$ 28.2678
in 2020.
Average official FX rate for 12 months: UAH/US$ 27.2835 in 2021 and UAH/US$
26.9639 in 2020.
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 2021
International/UK Dial in: +44 203 984 9844
Ukraine: +380 89 324 0624
USA free call: +1 718 866 4614
Participant PIN code 645982
To follow the presentation together with the management, please use the
following link:
https://mm.closir.com/slides?id=645982
(https://mm.closir.com/slides?id=645982)
For enquiries, please contact:
Anastasia Sobotiuk (Kyiv) +38 641 30 72
65 a.sobotyuk@mhp.com.ua (mailto:a.sobotyuk@mhp.com.ua)
Segment Performance
Poultry and related operations segment
Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Poultry
Sales volume, third parties tonnes 180,028 175,135 3% 185,389 -3% 704,010 699,926 1%
Domestic sales volume, third parties tonnes 70,767 79,551 -11% 106,231 -33% 288,831 324,285 -11%
Export sales volume, third parties tonnes 104,841 94,709 11% 74,738 40% 402,388 373,734 8%
Price per 1 kg net of VAT, USD 1.77 1.36 30% 1.79 -1% 1.67 1.34 25%
Average price per 1 kg net of VAT, UAH (Ukraine) 46.76 38.06 23% 48.47 -4% 45.37 34.54 31%
Average price per 1 kg net of VAT, USD (Ukraine) 1.75 1.35 30% 1.8 -3% 1.66 1.28 30%
Average price per 1 kg net of VAT, US$ (export) 1.77 1.37 29% 1.75 1% 1.67 1.40 19%
Culinary products sales, tonnes 4,419 877 404% 4,420 0% 12,791 1,909 570%
Sunflower oil
Sales volume, third parties tonnes 79,480 82,590 -4% 36,620 117% 207,240 330,823 -37%
Soybeans oil
Sales volume, third parties tonnes 9,622 7,783 24% 12,571 -23% 45,209 40,904 11%
Chicken meat
The aggregate volume of chicken meat sold to third parties remained relatively
stable in Q4 2021 and during 12M 2021.
Through 12M 2021 the average export chicken meat price increased by 19%
to USD 1.67 compared to 12M 2020 mainly driven by strong prices on breast
and fillet in Europe and quarters and small chicken in the MENA region.
Average poultry price on the domestic market increased by 30% year-on-year
mainly driven by a substantial poultry production cost increase since Q4 2020
and substantial utilities (gas mainly) price increase since the end of Q3 2021
as well as strong and upward price trends for all proteins during the period
in the country. Additional effect of price increase was due to low poultry
price through 2020 as a result of the COVID-19 impact.
Vegetable oil
During 12M 2021 MHP's sales of sunflower oil have decreased by 37% compared to
12M 2020 to 207,240 tonnes, mainly driven by reduced production of oil as a
result of a decreased of share of sunflower cake in fodder (due to a change in
recipe).
Sales of soybeans oil have increased by 11% during 12M 2021 to 45,209 tonnes,
mainly as a result of an increased share of soya cake in the fodder recipe (in
partial substitution for sunflower cake), which also resulted in decreased
sales of soybean cake to third parties.
Poultry and Related Operations segment - financial results and trends
(in mln. US$, unless Q4 2021 Q4 2020 % change YoY* Q3 2021 % change QoQ 12M 2021 12M 2020 % change*
indicated otherwise)
Revenue 467 328 42% 433 7% 1,607 1,298 24%
- Poultry and other 276 255 8% 366 -33% 1,224 1,022 20%
- Vegetable oil 191 73 162% 67 65% 383 276 39%
IAS 41 standard 7 (6) 217% (11) 257% 14 (17) 182%
gains/(losses)
Gross profit 66 15 340% 76 -15% 285 191 49%
Gross margin 14% 5% 9 pps 18% -4 pps 18% 15% 3 pps
Adjusted EBITDA 57 14 307% 70 -23% 267 194 38%
Adjusted EBITDA margin 12% 4% 8 pps 16% -4 pps 17% 15% 2 pps
Adjusted EBITDA 0.28 0.11 155% 0.44 -57% 0.36 0.30 20%
per 1 kg (net of IAS 41)
* pps - percentage points
During 12M 2021 the segment's revenue increased by 24% year-on-year driven
mostly by an increased price of chicken meat.
IAS 41 standard gain/(loss) reflects the net change in fair value of
biological assets and agricultural produce. IAS 41 standard gain during 12M
2021 amounted to US$ 14 million mainly as a result of increased poultry
prices.
The gross profit of the segment for 12M 2021 increased by 49% year-on-year
driven mainly by higher prices of chicken meat. Poultry production costs in Q4
2021 increased compared to Q3 2021 primarily reflecting higher cost of fodder.
During 12M 2021, adjusted EBITDA increased by 38% in line with the increase in
gross profit.
Grain Growing segment
In 2021 MHP harvested around 351,000 hectares of land in Ukraine and gathered
around 2.60 million tonnes of crops, 52% more than 2020 mainly due to
favorable weather conditions together with the positive effects of modern
technology and machinery applied during the cultivation of land and favorable
weather condition. MHP's average yields remain well above the average for
Ukraine for all crops due to operational efficiency and employment of best
practices.
2021 ( 1 ) 2020 ( 1 )
Production volume Cropped Production volume Cropped
land land
in tonnes in hectares in tonnes in hectares
Corn 1,624,173 163,295 864,537 155,094
Wheat 216,007 36,773 208,143 40,827
Sunflower 279,822 88,256 261,886 93,713
Rapeseed 71,055 21,522 80,708 30,857
Soya 57,208 22,879 43,192 19,118
Other ( 2 ) 348,590 18,715 248,476 16,437
Total 2,596,855 351,440 1,706,942 356,046
( 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;
2021 2020
MHP's Ukraine's average ( 1 ) MHP's Ukraine's average( 1 )
average ( 1 ) average ( 1 )
tonnes per hectare tonnes per hectare
Corn 10.0 8.0 5.6 5.4
Wheat 5.9 4.6 5.1 3.7
Sunflower 3.2 2.5 2.8 2.0
Rapeseed 3.3 3.0 2.6 2.2
Soya 2.5 2.7 2.3 2.0
( )( 1 ) MHP yields are net weight, Ukraine yields are bunker weight.
(in mln. US unless indicated otherwise) 12M 2021 12M 2020 % change
Revenue 188 134 40%
IAS 41 standard gains/(losses) 169 46 267%
Gross profit 336 94 257%
Adjusted EBITDA 397 150 165%
Adjusted EBITDA (net of IFRS 16) 338 97 248%
Adjusted EBITDA (net of IFRS 16) per 1 hectare 962 272 254%
Grain Growing Segment's revenue for 12M 2021 amounted to US$ 188 million
compared to US$ 134 million in 12M 2020. The increase in revenue was mainly
attributable to the higher volumes of crops sold in 2021 as a result of the
stronger harvest in 2021 compared to 2020 together with an increase in grain
prices.
The IAS 41 standard gain for 12M 2021 amounted to US$ 169 million. The gain
was primarily driven by higher amount of crops in stock designated for sale as
of 31 December 2021, compared to 31 December 2020, mainly as a result of the
higher yields in 2021.
Adjusted EBITDA (net of IFRS 16) of the segment in 12M 2021 increased by 248%
year-on-year, reflecting the increase in grain prices as well as by the
stronger harvest in 2021 compared to 2020.
Meat processing and other agricultural operations segment
Meat processing products Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Sales volume, third parties tonnes 8,507 7,234 18% 9,378 -9% 33,954 32,626 4%
Price per 1 kg net VAT, UAH 88.29 74.72 18% 83.37 6% 82.20 70.78 16%
In Q4 2021 and during 12M 2021 sales of processed meat products increased by
18% and 4% and amounted to 8,507 tonnes and 33,954 tonnes. The average price
of processed meat increased by 16% year-on-year to UAH 82.20 per kg in 12M
2021, driven mainly by an increase in raw material price (poultry meat).
Convenience food Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Sales volume, third parties tonnes 4,750 5,314 -11% 5,442 -13% 18,857 19,905 -5%
Price per 1 kg net VAT, UAH 52.58 46.45 13% 47.58 11% 48.62 39.94 22%
Sales volumes of convenience food in 12M 2021 decreased by 5% to 18,857
tonnes. The average price in 12M 2021 increased by 22% to 48.62 UAH per kg
(excluding VAT).
(in mln. US$, except margin data) Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Revenue 49 38 29% 49 0% 176 144 22%
- Meat processing 40 29 38% 41 -2% 143 114 25%
- Other* 9 9 0% 8 11% 33 30 10%
IAS 41 standard loss (4) - 100% - 100% (1) - 100%
Gross profit 0 5 -100% 3 -100% 17 19 -11%
Gross margin 0% 13% -13 pps 6% -6 pps 10% 13% -3 pps
Adjusted EBITDA (1) 5 -120% 1 -200% 11 20 -45%
Adjusted EBITDA margin -2% 13% -15 pps 2% -4 pps 6% 14% -8 pps
* includes, milk, cattle and feed grains.
Segment revenue for 12M 2021 increased by 22% year-on-year to US$ 176 million,
mainly due to an increase in the volume of meat processing products as well as
by an increase in price.
The IAS 41 standard loss was mainly driven by milk operations due to increased
cost.
The segment's adjusted EBITDA in 12M 2021 decreased to US$ 11 million driven
mainly by an increase in cost.
European operating segment (PP)
Poultry Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Sales volume, third parties, tonnes 17,924 15,165 18% 19,367 -7% 72,841 63,007 16%
Price per 1 kg net VAT, EUR 2.70 2.48 10% 2.66 2% 2.59 2.52 3%
In Q4 2021 poultry sales of the European operating segment were 17,924 tonnes,
18% higher compared to Q4 2020 driven by an increase in sales volumes in
Bosnia&Herzegovina, Serbia, and Austria. The average price in Q4 2021
increased by 10% to EUR 2.70, as a result of a positive price dynamic for
poultry prices both in the EU and in the world. In 12M 2021 sales increased by
16% to 72,841 tonnes with the average price up 3% to EUR 2.59.
Meat processing products (1)) Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Sales volume, third parties, tonnes 10,321 9,918 4% 11,030 -6% 40,366 38,771 4%
Price per 1 kg net VAT, EUR 2.83 2.75 3% 2.76 3% 2.78 2.72 2%
1) includes sausages and convenience foods
In Q4 2021 meat processing sales of the European operating segment were 10,321
tonnes, 4% higher compared to Q4 2020. The average price in Q4 2021 was up 3%
at EUR 2.83. In 12M 2021 sales increased by 4% to 40,366 tonnes with the
average price up 2% to EUR 2.78.
(in mln. US$, except margin data) Q4 2021 Q4 2020 % change YoY Q3 2021 % change QoQ 12M 2021 12M 2020 % change
Revenue 100 87 15% 110 -10% 401 335 20%
IAS 41 standard gain/(loss) 2 - 100% - 100% 3 1 200%
Gross profit 21 22 -5% 31 -48% 106 93 14%
Gross margin 21% 25% -4 pps 28% -7 pps 26% 28% -2 pps
Adjusted EBITDA 13 15 -13% 19 -46% 66 55 20%
Adjusted EBITDA margin 13% 17% -4 pps 17% -4 pps 16% 16% 0 pps
Adjusted EBITDA (net of IFRS 16) 13 15 -13% 18 -38% 63 53 19%
Adjusted EBITDA margin (net of IFRS 16) 13% 17% -4 pps 16% -3 pps 16% 16% 0 pps
The European operating segment's revenue in 12M 2021 increased by 20% to US$
401 million, mainly as a result of increased poultry sales volume and prices.
Adjusted EBITDA (net of IFRS 16) increased by 19% to US$ 63 million for the
year (12M 2020: US$ 53 million), mainly due to higher operational
efficiencies, which allowed to offset growing cost of raw materials, positive
impact from appreciation of the EURO against US Dollar as well as one-off
effects related to insurance and some change in accounting treatment from past
events. Adjusted EBITDA margin (net of IFRS 16) was unchanged at 16% in
12M 2021.
Current Group financial position and cash flow
(in mln. US$) Q4 2021 Q4 2020 12M 2021 12M 2020
Cash from operations 91 29 370 225
Change in working capital (224) (96) (245) (154)
Net Cash from operating activities (133) (67) 125 71
Cash used in investing activities (3) (34) (100) (129)
Net cash outflow on acquisition of subsidiaries - - (2) -
CAPEX (1)) (51) (21) (143) (79)
Cash used in financing activities 163 10 106 (21)
Dividends (33) - (71) (31)
Total financial activities 130 10 35 (53)
Total change in cash (2)) (6) (91) 60 (110)
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 Total financial activities
Cash flow from operations before changes in working capital in 12M 2021
increased to US $ 370 million (12M 2020: US$ 225 million).
The increase in working capital during 12M 2021 compared to 12M 2020 is mostly
related to higher investments in the stock of corn designated for internal
use, mainly following higher yields in 2021 as well as higher investments in
the sunflower seed and increased grain price.
During 12M 2021 total CAPEX amounted to US$ 143 million mainly related to the
requirements in maintenance, improvements and expansion of Perutnina Ptuj
production facilities and modernization and cost optimisation projects as well
as the development of new culinary products.
Debt Structure and Liquidity
(in mln. US$) 31 December 2021 30 September 2021 31 December 2020
Total Debt (1)) 1,505 1,451 1,462
LT Debt (1)) 1,489 1,431 1,453
ST Debt (1)) 126 20 36
Trade credit facilities(2)) (110) - (27)
Cash and cash equivalents (275) (287) (218)
Net Debt(1)) 1,230 1,164 1,244
LTM adjusted EBITDA(1)) 648 558 340
Net Debt / LTM ADJUSTED EBITDA(1)) 1.90 2.09 3.66
1) Net of IFRS 16 adjustments: as if any lease that would have been treated as
an operating lease under IAS 17 as was in effect before 1 January 2019, is
treated as an operating lease for purposes of this calculation. In accordance
with covenants in MHP's bond and loan agreements, these data exclude the
effects of IFRS 16 on accounting for operating leases.
2) Indebtedness under trade credit facilities that is required to be repaid
within 12 months of drawdown should be excluded for purposes of this
calculation.
As of 31 December 2021, the share of long-term debt in the total outstanding
debt is 99%. The weighted average interest rate was below 7%.
As of 31 December 2021, MHP's cash and cash equivalents amounted to US$ 275
million.
Net debt decreased to US$ 1,229 million, compared to US$ 1,244 million as of
31 December 2020.
The Net Debt / LTM adjusted EBITDA (net of IFRS 16) ratio declined from 3.66
at 31 December 2020 to 1.90 as of 31 December 2021, well below the defined
limit 3.0 to 1
As a hedge for currency risks, revenue from the export 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
requirements. Export revenue for 12M 2021 amounted to US$ 1,265 million or
53% of total revenue (US$ 1,016 million or 53% of total revenue for 12M
2020).
DIVIDENDS
At an extraordinary general meeting on 28 April 2021, the Shareholders of MHP
SE approved payment of an annual dividend of US$ 0.2803 per share, equivalent
to US$ 30 million, to shareholders on the register as of 7 May 2021.
At its meeting on 17 November 2021, in recognition of the Company's
exceptional performance in 2021, the Board of Directors approved the payment
of a one-off special dividend of US$ 0.2803 per share equivalent to US$ 30
million.
Taking into account the current 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 national food
security, the Board of MHP SE has decided that no final dividend will be paid.
BOARD CHANGES
On 18 January 2021, the Company announced that Mr Roger Wills, an independent
non-executive director, had resigned from the MHP SE Board.
On 09 February 2021, the Company announced that Mr. Roberto Banfi, after two
and half years as a non-executive director and a member of the International
Government Relations and Public Affairs Committee, was retiring from the Board
of Directors of MHP SE. At the same time, Mr. Banfi became an Advisor to the
Board with a possibility to join both Board and Committees meetings on a
regular basis on invitation from the Chairman of the Board and Chairmen of
Committees.
On 8 September 2021 Philip J Wilkinson OBE was appointed to chair the
Nominations and Remuneration Committee. Dr John Rich stepped down
simultaneously as Interim Chairman of the Nominations and Remuneration
Committee and continues to serve as a member of the Committee.
On 16 November 2021 Yuriy Melnyk resigned from the Board.
On 28 December 2021 Andriy Bulakh joined the Board.
WAR IN UKRAINE
The military invasion of Ukraine by Russian forces began at 5 am on
24 February, marking the beginning of a full-scale war across Ukraine.
Russian invaders have shown utter disregard for civilian lives and directed
lethal firepower on cities, towns and villages; production facilities,
hospitals, houses, cars and bystanders on the streets; elderly people and
families with children who were seeking shelter from the fighting. Many human
lives have tragically been lost. As of the date of this report, the war in
Ukraine continues at extended scale, inflicting damage and destruction on the
country's infrastructure and the Ukrainian population.
As reported by MHP earlier, since the beginning of the war the Company has
been facing significant logistical and infrastructure challenges in Ukraine.
While MHP has been able to continue commercial sales in Ukraine since the war
began, export sales ceased as a result of ports being closed, while export
delivery by truck remained practically impossible. During March, an MHP team
has been developing alternative logistic routes for exports, enabling as yet
limited volumes to be delivered outside of Ukraine. As a result of restricted
sales both inside and outside the country, MHP had to decrease poultry
capacity utilization to 80-85%.
Due to shelling by the occupying forces on March 12, in the village of
Kvitneve (Kyiv region), a fire broke out in a warehouse (two buildings rented
by the Company) where frozen MHP chicken meat products were stored. As a
result of the fire, over 3,000 tonnes of poultry products were lost. The
facility was Ukraine's largest warehouse for storage of frozen products and
was predominantly used by large local retail chains.
As hostilities in the Donetsk region intensified, in April MHP decided to
temporarily suspend operations of "Ukrainian Bacon" (a meat-processing
operation with c.34,000 tonnes annual capacity, located in the Kramatorsk
district in the Donetsk region). As of the date of this report, the facility
has not been damaged and remains under MHP control. MHP is currently working
to re-establish Ukrainian Bacon operations in other MHP facilities.
MHP has a key responsibility in the food security of Ukraine and has continued
its operations despite significant difficulties and disruptions. MHP fully
understands how important poultry production is for Ukraine and its population
at this difficult time. All MHP employees are fully committed to every effort
to ensure that Ukrainians have access to food now and in the future. The
Company has continued to provide humanitarian aid (mainly through food supply)
to the population of Ukraine since the beginning of the war and is working
hard to manage logistical challenges across all regions of Ukraine. Since the
war began, the Company has provided around 11,000 tonnes of free-of-charge
poultry products, other food, equipment, cars, diesel and different materials
as part of its humanitarian mission.
CONSENT SOLICITATION PROPOSAL - DEFERRAL OF PAYMENT OF EUROBOND COUPONS
On 21 March 2022, MHP announced a Consent Solicitation Proposal to seek the
consent of bondholders to defer the payments of the coupons of three Eurobonds
(2024, 2026 and 2029) by 270 days from their due dates in March-May 2022. On
31 March 2022, the Company announced that the Consent Solicitation Proposal
had been completed ahead of schedule following receipt of approval from the
majority of holders of each of its outstanding Eurobonds.
OUTLOOK/GOING CONCERN
Until the Russian invasion commenced on the 24th of February 2022 had started
well for MHP, with production going to plan and strong global prices for
poultry and agricultural commodities.
Since 24 February, MHP and its entire Ukrainian workforce have responded to
the dramatic changes in circumstances with alacrity and considerable success
to date in maintaining production and sales, albeit at reduced levels. In
spite of considerable ongoing logistics challenges, poultry production has
already recovered to about 85% of normal capacity and in the second half of
the year, we hope to harvest grain crops from the 90% of our land where sowing
is now in progress, with excellent early growing conditions. We expect shortly
to recommence production and export of vegetable oils and if current logistics
trials are successful, to at least partially restore poultry exports.
Due to global shortages, which are expected to continue into 2023, prices of
both poultry and grain are expected to remain at high levels at least for the
rest of 2022, although for MHP the positive effect of higher prices will be
partly offset by strong cost inflation, for example in utilities, energy and
essential commodities, in addition to more costly logistics solutions.
With the recent strong support of holders of our Eurobonds and our bankers,
the Group is currently adequately funded to maintain operations and business
continuity.
There remains extreme uncertainty about how the war in Ukraine will progress
and the effects this could have on MHP's operations over the coming months. As
a result and in spite of the Group's success in maintaining operations thus
far, at this stage it is not possible to provide guidance as to how the year
may turn out.
Notes to Editors:
About MHP
MHP is the leading producer of poultry products not only in Ukraine, but also
in the Balkans (Perutnina Ptuj Group).
Ukraine: MHP has the greatest market share (over 30% of poultry consumption)
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). Complete vertical
integration practically eliminates MHP's exposure to raw material price
fluctuations since its grain production exceeds internal consumption
requirements, allowing the Company to be an important participant in the
international commodity trade. In addition to cost efficiency, vertical
integration also enables MHP to maintain strict biosecurity and to control the
quality of its inputs and the resulting quality and consistency of its
products all the way 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 own truck fleet to distribute its
products, reducing overall transportation costs and delivery times.
MHP also has a leading grain cultivation business growing corn, soya and
sunflower 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 (PP) is a leading poultry and meat-processing
producer in the Balkans, with production sites in four Balkan countries:
Slovenia, Croatia, Serbia, Bosnia and Herzegovina. PP owns distribution
companies in Austria, Macedonia and Romania and supplies products to fifteen
countries in Europe. PP is vertically integrated across all states of chicken
meat production - feed, hatching eggs production and hatching, breeding,
slaughtering, sausage production and further poultry processing.
MHP trades 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.
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