Ukraine poultry giant MHP warns on export challenges, scraps outlook

MHP SE

17/06/2022 16:04

BENGALURU/LONDON, June 17 (Reuters) - Ukrainian chicken and
grains processor MHP  MHPC.PFT , the country's top food
producer, warned on Friday that it could not give an outlook for
the year due to the war with Russia and challenges exporting
goods.
    The company, which usually produces tens of thousands of
tonnes of meat, wheat and vegetable oil every month, said
poultry production capacity had been reduced to 80-85% of normal
levels so far.
    "I can't predict anything," MHP's Chief Financial Officer
Viktoria Kapelyushnaya said during a conference call. 
    With Ukraine's Black Sea ports controlled by Russia, the
company had to divert produce by road and air or to ports as far
away as Romania, she said. 
    "Taking into account current working environment and
uncertainties it brings, as of today it is quite challenging to
predict how the financial and operational results for the year
of 2022 will look like," MHP earlier said in a statement.
    MHP, which focuses on poultry production and grain
cultivation, said poultry and vegetable oil prices are likely to
remain high at least into 2023 due to global supply constraints
and cost pressures amid the ongoing conflict.
    "In addition, due to port closures, exports of poultry and
vegetable oils were severely impacted," said the company, which
supplies poultry products to 85 countries, including those in
Europe and the Middle East.
    Ukraine's economy has been firefighting multiple challenges
ever since Russian troops poured across its border in February,
and with the conflict showing no signs of weakening, businesses
there are staring at an uncertain future.
    Ukraine's state energy behemoth Naftogaz on Thursday
postponed its results in the wake of the ongoing crisis.
    Strong sales during the pre-conflict period meant MHP's
first quarter revenue grew 24% to $553 million, while export
revenue jumped 42% to $308 million. 
    Still, higher costs pushed it to a first-quarter net loss of
$122 million, compared to a profit of $1 million in the year-ago
period.
    MHP said it is focused on improving poultry sales in the
domestic market, although it said its domestic gross margins
were "significantly lower" than last year due to the various
problems.
    Shortly after Russia's invasion in March, the firm's
creditors agreed to allow it to push back payments on its bonds
by 9 months. 
    Kapelyushnaya said the company hoped to restart the payments
in September although that could not be guaranteed.

 (Reporting by Aby Jose Koilparambil in Bengaluru and Marc Jones
in London, editing by Deepa Babington)
 ((abyjose.koilparambil@thomsonreuters.com; +919986528692;))