REG - MHP SE - Pre Close TU for Q4 and 12M 2021

MHP SEAnnouncement

27/01/2022 08:05

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RNS Number : 8315Z  MHP SE  27 January 2022

 

27 January 2022, Limassol, Cyprus

MHP SE

Pre-close trading update 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
pre-close trading update 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".

POULTRY AND RELATED OPERATIONS (w/o PP)

All Company's poultry production facilities continued to operate at full
capacity.

Poultry production volumes in Q4 2021 increased by 7% to 202,657 tonnes (Q4
2020: 189,687 tonnes), driven mainly by continued lower share of small bird
production since Q3 2021, and increased by 4% compared to Q3 2021 (194,199
tonnes). In 12M 2021 poultry production volumes increased by 3% to 754,387
tonnes (12M 2020: 731,279 tonnes).

Poultry Sales

 Poultry                                           Q4 2021  Q4 2020      % change YoY      Q3 2021  % change QoQ  12M 2021  12M 2020  % change
 Sales volume, third parties tonnes                180,028  175,135(2))  3%       185,389           -3%           704,010   699,926   1%
 Domestic sales volume, tonnes                     70,767   79,551       -11%     74,738            -5%           288,831   324,285   -11%
 Export sales volume, tonnes                       104,841  94,709       11%      106,231           -1%           402,388   373,734   8%
 Culinary products sales, tonnes                   4,419    877          404%     4,420(3))         0%            12,791    1,909     570%
 Share of export sales, %                          58%      54%          4 pps    59%               0 pps         57%       54%       3 pps
 Average price per 1 kg net of VAT, US$(1))        1.72     1.36         26%      1.74              -1%           1.63      1.34      22%

 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, US$ (Ukraine)  1.75     1.35         30%      1.80              -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%

 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%

(1)) Average official FX rate for Q4 2021 UAH/US$ 26.68 and for Q4 2020
UAH/US$ 28.27

  Average official FX rate for 12M 2021 UAH/US$ 27.29 and for 12M 2020
UAH/US$ 26.96

(2)) Total poultry sales include domestic sales, export sales and sales of
culinary products; data for 2020 has been adjusted accordingly to this
approach;

(3)) Corrected data (published data as of 18 November 2021, Financial Results
of Q3 and 9M 2021 - 2,702 tonnes of culinary products - was incorrected as it
didn't include all culinary products of MHP).

Q4 2021

During the period overall third parties sales increased by 3% to 180,028
tonnes y/y, while chicken meat sales in Ukraine decreased by 11% y/y resulting
in 70,767 tonnes (by 5% lower compared to Q3 2021: 74,738 tonnes), partially
due to decreased sales of frozen chicken.

Following its strategy of culinary transformation, sales of culinary products
(marinated meat, value-added and ready-to-cook meals/products etc) increased
by almost 5 times and reached 4,419 tonnes (included into poultry meat).

Poultry exports increased by 11% y/y to 104,841 tonnes of meat and remained
relatively stable q/q. Total poultry exports in Q4 2021 constituted around 58%
vs 54% in 4Q 2020 of total poultry sales volumes.

Diagramme 1. Geography of export sales breakdown, tonnes

Q4
2020
Q4 2021

http://www.rns-pdf.londonstockexchange.com/rns/8315Z_1-2022-1-27.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8315Z_1-2022-1-27.pdf)

 

12M 2021

Poultry sales remained relatively stable and constituted 704,010 tonnes of
poultry (12M 2020: 699,926 tonnes): poultry sales in Ukraine decreased by 11%
y/y, while exports increased by 8% y/y, partially affected by decreased sales
of frozen meat.

Sales of culinary products increased by 6.7 times and reached 12,791 tonnes.

Diagramme 2. Geography of export sales breakdown,
tonnes

12M
2020
12M 2021

 

http://www.rns-pdf.londonstockexchange.com/rns/8315Z_1-2022-1-27.pdf
(http://www.rns-pdf.londonstockexchange.com/rns/8315Z_1-2022-1-27.pdf)

 

Poultry Prices

In Q4 2021 the average chicken meat price (both domestic and export)
constituted US$ 1.72 per 1 kg of natural weight (excluding VAT), increased by
26% year-on-year, supported by strong prices both in Ukraine and on export
markets; in 12M 2021 the average chicken meat price increased by 22% increase
year-on-year to US$ 1.63 per 1 kg.

Poultry prices in Ukraine in Q4 2021 increased by 30% y/y to US$ 1.75 per 1 kg
and decreased by 3% q/q; in 12M 2021 prices increased by 30% to US$ 1.66 per 1
kg, 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.

Export poultry price in Q4 2021 increased by 29% y/y to US$ 1.77 per 1 kg and
remained stable q/q; in 12M 2021 export poultry price increased by 19% to US$
1.67 per kg, mainly driven by strong prices on breast and fillet in Europe,
quarters, small chicken price in the MENA region.

Vegetable oils

In Q4 2021, MHP's sales of sunflower oil decreased by 4% to 79,480 tonnes y/y
and increased by 117% q/q. In 12M 2021 sunflower oil exports decreased by 37%
y/y to 207,240 tonnes. The decrease in sales in 12M 2021 is mainly driven by a
decrease in production of oil because of decreased share of sunflower cake in
fodder (change in recipe).

 

In Q4 2021, soybean oil exports increased by 24% y/y to 9,622 tonnes and
decreased by 23% q/q; in 12M 2021 sales increased by 11% y/y to 45,209 tonnes.
The increase in sales of soybean oil in 12M 2021 is a result of soya cake
share increase in fodder recipe and partial substitution of sunflower cake in
it, which also resulted in decreased sales of 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 2021 in grain growing operations the Company harvested around 351,440
hectares of land and gathered around 2.6 million tonnes of crops, 52% more
versus 2020 mainly positively affected by a combination of modern technology
and machinery applied during the cultivation of land and favorable weather
condition.

            2021                                 2020
            Production volume  Cropped land      Production volume  Cropped 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*     348,590            18,715            248,476             16,437
 Total      2,596,855          351,440           1,706,942           356,046

 

*- Including barley, rye, sugar beet, sorghum and other and excluding land
left fallow as part of crop rotation

 

            2021                                     2020
            MHP's average*  Ukraine's average**      MHP's average  Ukraine's average
            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

*- net weight, ** - bunker weight

OTHER AGRICULTIRAL OPERATIONS AND MEAT PROCESSING

 Meat processing products         Q4 2021  Q4 2020  % change YoY  Q3 2021  % change QoQ  12M 2021  12M 2020  % change
 Sales volume, 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%

 Convenience Food                 Q4 2021  Q4 2020  % change YoY  Q3 2021  % change QoQ  12M 2021  12M 2020  % change
 Sales volume, 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    10%           48.62     39.94     22%

Sales volumes of meat-processing products (sausages and smoked meat) in Q4
2021 increased by 18% y/y to 8,507 tonnes but decreased by 9% q/q. The average
price in Q4 2021 increased by 18% to UAH 88.29 per kg y/y and by 6% q/q,
driven mainly by an increase in raw material price (poultry meat).

Sales volumes of convenience food in Q4 2021 decreased by 11% y/y to 4,750
tonnes and decreased by 13% q/q. The average price in Q4 2021 increased by 13%
y/y to UAH 52.58 per kg and increased by 10% q/q.

 

PERUTNINA PTUJ (PP) RESULTS

 Poultry                          Q4 2021  Q4 2020  % change YoY  Q3 2021  % change QoQ  12M 2021  12M 2020  % change
 Sales volume, 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     9%            2.66     2%            2.59      2.52      3%

 Meat processing products*        Q4 2021  Q4 2020  % change YoY  Q3 2021  % change QoQ  12M 2021  12M 2020  % change
 Sales volume, tonnes             10,321   9,918    4%            11,030   -6%           40,366    38,772    4%
 Price per 1 kg net VAT, EUR      2.83     2.75     3%            2.76     3%            2.78      2.72      2%

*-includes sausages and convenience foods

In Q4 2021 PP's poultry production facilities produced 28,043 tonnes of
chicken and turkey meat, 14% more y/y. Poultry sales constituted 17,924
tonnes, 18% higher y/y, but 7% lower q/q (due to annual seasonality). In 12M
2021 PP's poultry production facilities produced 111,973 tonnes of chicken and
turkey meat, 10% more y/y. Poultry sales constituted 72,841 tonnes, 16% higher
year-on-year, which is mainly driven by an increase in sales volumes in
Bosnia-Herzegovina, Serbia, and Austria.

In Q4 2021 PP's meat-processing (including sausages, convenience foods)
facilities produced 10,420 tonnes, 6% higher y/y. Sales constituted 10,321
tonnes, 4% higher y/y, but 6% lower q/q (due to annual seasonality). In 12M
2021 PP's meat-processing facilities produced 41,411 tonnes of meat-processing
products, 5% higher y/y; sales constituted 40,366 tonnes, 4% higher y/y, which
is mainly driven by an increase in sales volumes in Kosovo, Germany, Serbia,
and Croatia.

Both in poultry and meat processing divisions, prices showed positive to
stable trends both in Q4 and during the year of 2021 compared to same periods
of 2020 as a result of positive price dynamic for poultry prices both in the
EU and in the world.

Next release

The financial results for Q4 and 12M 2021 will be published on 24 March
2022.  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:

                                              +38 044 207 00 70

 Anastasiya Sobotyuk (Kyiv)                   +38 050 339 29 99

                                              a.sobotyuk@mhp.com.ua (mailto:a.sobotyuk@mhp.com.ua)

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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