Ukraine's MHP agricultural holding boosts chicken meat sales 6% in 9M

MOSCOW. Nov 16 (Interfax) - - MHP agricultural holding, Ukraine's biggest poultry meat producer, boosted sales of chicken meat 6% year-on-year to 546,369 tonnes in January-September 2023 from 515,488 tonnes a year previously, Ukrainian media reported, citing a company report posted on the London Stock Exchange's website.

Poultry meat production volumes at the group's European assets increased almost 7% to 99,850 tonnes.

The holding produced 187,036 tonnes of chicken in Ukraine in Q3, up 10% from the same period in 2022; production in Europe increased 5% to 34,764 tonnes.

The average price of MHP poultry meat in Ukraine for 9M was $1.94/kg, compared with $1.97/kg a year earlier, excluding VAT; for products from the European segment it increased 8% to 3.46 euros/kg.

Domestic sales rose 3% in 9M, mainly due to higher demand. Exports of Ukrainian chicken increased 21% to 311,978 tonnes, mainly from a low base of last year. Total sales to third parties increased 13% to 535,201 tonnes.

Export prices for poultry decreased 9%. Prices on the domestic market in dollar terms increased by 9%, driven by increased sales volumes of high-margin fillet and due to higher costs resulting from significant inflation both in 2022 and 9M 2023.

Processed poultry meat exports rose 40% to 3,825 tonnes, and the average price increased by 15% to $2.88/kg, driven mainly by an increase in raw material prices (spices, packaging and other components) as well as by a positive change in product mix.

The average price for poultry meat in Ukraine in Q3 was $1.96/kg, up from $2.03/kg a year earlier, and for production in Europe - 3.42 euros/kg, up from 3.34 euros/kg. Poultry export from Ukraine amounted to 99,813 tonnes compared with 99,250 tonnes.

Segment revenue increased 14% year-on-year in 9M 2023 as a result of sales volume increase of poultry meat and processed meat that was partly set off by lower meat price on export markets. Standard gain in 9M 2023 decreased to $16 million mainly as a result of a lower chicken meat price and optimization of meat stocks volumes comparing to 9M 2022. Gross profit increased to $311 million and adjusted EBITDA to $260 million.

Agriculture segment revenue in 9M 2023 amounted to $138 million, up 27% from $109 million in 9M 2022. The increase was mainly attributable to the higher volume of sales of corn purchased from farmers in Ukraine.

The reduction in adjusted EBITDA to negative $32 million in H1 2023 from positive $55 million in 2022 was caused by lower revaluation of spring crops and agriculture produce as a result of the decrease in domestic prices due to limited export capabilities, as well as lower revaluation of milk cattle due to higher costs of milk production.

The company expects Agriculture segment EBITDA for 2023 to be significantly lower than in 2022. A significant decrease in international grain prices, as well as increased logistic costs will have limited impact on the overall Group performance, as almost all grains and oilseeds except for rapeseeds and some wheat are consumed internally.

As of November 15, the date of the report, MHP's harvesting campaign was complete on around 303,000 ha or 87% of the area: corn harvesting was 82% complete, and sunflower, soya, wheat and rapeseed were 100% complete.

Agricultural yields are generally higher than last year: corn - 9.8 t/ha (compared to 7.2 t/ha a year earlier), wheat - 6.6 t/ha (5.5 t/ha), sunflower - 3 .1 t/ha (2.5 t/ha), soybean - 3.1 t/ha (2.4 t/ha), and rapeseed - 3.7 t/ha (slightly lower than the previous figure of 3.8 t/ha ha).

As reported, the holding in mid-October completed the autumn sowing campaign, for which about 74.3 thousand hectares were allocated. Of these, about 53% is allocated for winter wheat and about 47% for winter rapeseed.

The MHP agricultural holding produces meat, grains, sunflower oil, and processed meat products. MHP supplies the European market with chilled half-carcasses of chickens, which are processed at home as well as at its enterprises in the Netherlands and Slovakia. The founder, majority shareholder and chairman of the board is Ukrainian businessman Yury Kosyuk.