REG - MHP SE - Q2 and H1 2022 Pre close trading update

MHP SEAnnouncement

27/07/2022 07:15

For best results when printing this announcement, please click on link below:
http://newsfile.refinitiv.com/getnewsfile/v1/story?guid=urn:newsml:reuters.com:20220727:nRSa8902Ta&default-theme=true

RNS Number : 8902T  MHP SE  27 July 2022

26 July 2022, Limassol, Cypr
us

MHP SE

Pre-close trading update for the second quarter and six months ended 30 June
2022

MHP SE (LSE: MHPC), the parent company of a leading international food &
agrotech group with headquarters in Ukraine, today announces its pre-close
trading update for the second quarter and six months ended 30 June 2022.
Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "The
Company" or "The Group".

WAR IN UKRAINE

The military invasion of Ukraine by Russian forces began on 24 February,
marking the beginning of a full-scale war across Ukraine.

Since the beginning of the war, the Company has been facing significant
logistical and infrastructure challenges in Ukraine. The logistics continues
to be challenging as the Black Sea ports remain blocked and alternative routes
are longer and significantly more complex; bottlenecks include numerous
subcontractors along the way to EU ports, complex logistics due to differing
railway gauges and long queues at the border.

Driven by restricted sales outside of the country and diminished number of
citizens as well as their incomes, MHP had to decrease poultry capacity
utilization to 85-90%.

POULTRY AND RELATED OPERATIONS (w/o PP)

Poultry production volumes in Q2 2022 decreased by 11% to 170,395 tonnes (Q2
2021: 190,908 tonnes) and remained relatively stable compared to Q1 2022
(175,644 tonnes). In H1 2022 poultry production volumes remained relatively
stable at 346,039 tonnes (H1 2021: 357,531 tonnes).

Poultry Sales

Driven by war-related challenges, during Q2 2022, third parties sales
decreased by 23% to 140,549 tonnes mainly as a result of lower exports
adversely effected by difficult and disrupted logistics.

 

                        H1
2022
H1 2021

 Poultry                                               Q2 2022  Q2 2021  % change YoY  Q1 2022  % change QoQ  H1 2022  H1 2021  % change
 Sales volume, third parties tonnes                    140,549  183,592  -23%          159,024  -12%          299,573  338,593  -12%
 Domestic sales volume, tonnes                         67,897   71,876   -6%           66,809   2%            134,706  143,326  -6%
 Export sales volume, tonnes                           68,552   109,055  -37%          89,340   -23%          157,892  191,315  -17%
 Culinary products sales, tonnes                       4,100    2,661    54%           2,875    43%           6,975    3,953    76%
 Share of export sales, %                              48%      39%      11 pps        42%      6 pps         45%      42%      3 pps
 Average price per 1 kg net of VAT, US$                2.03     1.67     22%           1.84     11%           1.93     1.56     24%

 Average price per 1 kg net of VAT, UAH (Ukraine)      41.77    44.88    -7%           45.62    -8%           43.86    43.06    1%
 Average price per 1 kg net of VAT, US$ (Ukraine)      1.43     1.63     -12%          1.60     -11%          1.51     1.55     -3%
 Average price per 1 kg net of VAT, US$ (export)       2.63     1.69     55%           2.01     31%           2.28     1.56     46%

 Sunflower oil
 Sales volume, third parties tonnes                    48,495   35,192   38%           32,981   47%           81,476   91,140   -11%
 Soybeans oil
 Sales volume, third parties tonnes                    9,191    11,871   -23%          10,355   -11%          19,547   23,017   -15%

* Average official FX rate for Q2 2022 UAH/US$ 29.25 and for Q2 2021 UAH/US$
27.59

   Average official FX rate for H1 2022 UAH/US$ 28.90 and for H1 2021
UAH/US$ 27.78

 

Poultry Prices

Through the second quarter of 2022 the average chicken meat price (including
culinary products) constituted US$ 2.03 per 1 kg of natural weight (excluding
VAT), which increased by 22% year-on-year; in H1 2022 the average chicken meat
price increased by 24% year-on-year to US$ 1.93 per 1 kg, driven mainly by
growth in Q1 2022.

Poultry prices in Ukraine in Q2 2022 decreased by 12% to US$ 1.43 per 1 kg
mainly driven by lower share in sales of chilled meat as well as product mix
structure.

Export poultry price in Q2 2022 increased by 55% year-on-year to US$ 2.63 per
1 kg, mainly driven products mix optimization of sales as well as by
substantial international price increase across all markets (fillets price in
the EU and MENA, small birds price in the MENA).

Vegetable Oils

MHP's sales of sunflower oil increased by 38% to 48,495 tonnes, mainly driven
by an increase in production of sunflower cake (change in the recipe), which
was lower in Q2 2021 (fodder recipe was based more on soyabean cake).

 

In H1 2022 sunflower oil exports decreased by 11% year-on-year to 81,476
tonnes. mainly driven by change in delivery terms because of the challenging
logistics (since March), but partially offset by an increase in production of
sunflower oil in Q2 2022.

 

In Q2 2022, soybean oil exports decreased by 23% year-on-year to 9,191 tonnes
and in H1 2022 sales decreased by 15% year-on-year to 19,547 tonnes as a
result of lower production volume of soyabean cake required for the fodder
recipe substituted by sunflower cake (mainly in Q2 2022) and challenges
associated with export logictics because of the war in Ukraine.

 

Since the beginning of the war exports of vegetable oils were substantially
limited. As of today, MHP team is undertaking all possible and necessary steps
to continue exports of vegetable oils using EU ports, railways and trucks
(flexy tanks/containers).

 

GRAIN GROWING OPERATIONS

In 2022 in grain growing operations segment the Company is to harvest around
335,000 hectares of land.

The Company's harvesting campaign of winter rapeseeds and wheat is on track,
of which around 70% and 25% harvested, respectively. All winter crops yields
are expected to be good and are in line with the Company's expectations taking
into account weather condition.

Spring crops (corn, soybeans and sunflower) are in good condition.

OTHER AGRICULTIRAL OPERATIONS AND MEAT PROCESSING

 Meat processing products         Q2 2022  Q2 2021  % change YoY  Q1 2022  % change QoQ  H1 2022  H1 2021  % change
 Sales volume, tonnes             2,289    8,462    -73%          6,015    -62%          8,304    16,069   -48%
 Price per 1 kg net VAT, UAH      88.34    80.72    9%            87.65    1%            87.84    78.29    12%

 Convenience Food                 Q2 2022  Q2 2021  % change YoY  Q1 2022  % change QoQ  H1 2022  H1 2021  % change
 Sales volume, tonnes             3,421    4,485    -24%          3,989    -14%          7,410    8,665    -14%
 Price per 1 kg net VAT, UAH      58.94    50.91    16%           53.55    10%           56.04    47.11    19%

Sales volumes of meat-processing products (sausages and smoked meat) in Q2
2022 decreased by 73% year-on-year to 2,289 tonnes, driven by war-related
consequences - the Ukrainian Bacon ceased its operations at the beginning of
April 2022. The average price in Q2 2022 increased by 9% to UAH 88.34 per kg
(excluding VAT) year-on-year driven mainly by an increase in raw material
price (poultry meat.

Sales volumes of convenience food in Q2 2022 decreased by 24% year-on-year to
3,421 tonnes, mainly driven by significant disruptions in HoReCa (both KFC and
McDonalds had to cease its operations in Ukraine because of the war). The
average price in Q2 2022 increased by 16% to UAH 58.94 per kg (excluding VAT)
mainly driven by raw material price increase as well as focus on more marginal
products sales increase.

EUROPEAN OPERATING SEGMENT - Perutnina Ptuj (PP)

 Poultry                          Q2 2022  Q2 2021  % change YoY  Q1 2022  % change QoQ  H1 2022  H1 2021  % change
 Sales volume, tonnes             19,619   19,508   1%            17,744   11%           37,363   35,549   5%
 Price per 1 kg net VAT, EUR      3.36     2.53     33%           2.83     19%           3.11     2.51     24%

 Meat processing products*        Q2 2022  Q2 2021  % change YoY  Q1 2022  % change QoQ  H1 2022  H1 2021  % change
 Sales volume, tonnes             10,238   9,868    4%            9,917    3%            20,156   19,016   6%
 Price per 1 kg net VAT, EUR      3.12     2.80     11%           2.91     7%            3.02     2.76     9%

*-includes sausages and convenience foods

Driven by continued growth in production across all production facilities in
the Balkans, in Q2 2022 PP's poultry production facilities produced 31,259
tonnes of chicken and turkey meat (6% more than in Q2 2021), while poultry
sales constituted 19,619 tonnes, stable year-on-year. In H1 2022 PP's poultry
production facilities produced 59,809 tonnes of chicken and turkey meat (11%
more than in H1 2021), while poultry sales constituted 37,363 tonnes, 5%
higher year-on-year.

In Q2 2022 PP's meat-processing (including sausages, convenience foods)
facilities produced 11,000 tonnes, 11% higher year-on-year, while sales
constituted 10,238 tonnes, 4% higher year-on-year. In H1 2022 PP's
meat-processing facilities produced 21,776 tonnes of meat-processing products,
13% higher year-on-year, while sales constituted 20,156 tonnes, 6% higher
year-on-year.

Both in poultry and meat processing divisions, prices showed substantial
growth both in Q2 and H1 2022 compared to same periods of 2021 driven by
significant price increases for meat and meat products on international
markets.

Next release

The financial results for Q2 and H1 2022 will be published on 07 September
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). Dialing instructions for
the call will be published in a due course.

 

For further information and Investor Relations/International Communications
enquiries please contact:

                                         +38 641 32 70 65

 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.

This information is provided by RNS, the news service of the London Stock Exchange. RNS is approved by the Financial Conduct Authority to act as a Primary Information Provider in the United Kingdom. Terms and conditions relating to the use and distribution of this information may apply. For further information, please contact
rns@lseg.com (mailto:rns@lseg.com)
 or visit
www.rns.com (http://www.rns.com/)
.

RNS may use your IP address to confirm compliance with the terms and conditions, to analyse how you engage with the information contained in this communication, and to share such analysis on an anonymised basis with others as part of our commercial services. For further information about how RNS and the London Stock Exchange use the personal data you provide us, please see our
Privacy Policy (https://www.lseg.com/privacy-and-cookie-policy)
.   END  TSTQDLBLLDLFBBB