Financial Results for the Fourth Quarter and Twelve Months Ended 31 December 2019

14.04.2020

 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 2019. Hereinafter, MHP SE and its subsidiaries are referred to as “MHP”, “The Company” or “The Group”.

EVENTS DURING AND POST REPORTING PERIOD

Further to the announcement in February 2019 of the acquisition of Perutnina Ptuj (“PP”), the largest producer of poultry meat and poultry meat products in the Balkans region of southeast Europe, MHP completed the acquisition of minority shareholders by the end of September 2019 and is now the 100% owner of PP. PP’s financial results are reported separately in the European Operating Segment.

On 13 September 2019, MHP announced that it had completed the issue of a US$ 350 million Eurobond of 6.25% notes due 19 September 2029. This is the longest-dated bond issued by a Ukrainian corporate and carries the lowest coupon in the private sector in Ukraine. Proceeds from this new issue enabled full repayment of MHP’s short-term liabilities (US$ 335 million at the end of H1 2019), extending MHP’s maturity profile and making virtually all its debt long-term.

OPERATIONAL HIGHLIGHTS

·         In 2019, MHP continued to launch additional production sites as part of Phase 2 of the Vinnytsia poultry complex (“Vinnytsia”) bringing the total number of rearing sites to six. The Company’s other poultry production facilities continued to operate at full capacity during the period

·         PP was successfully integrated into the Group, contributing US$ 271 million to Group revenue during the 10 months of 2019 during which it was consolidated, and a higher-than-expected 16% adjusted EBITDA margin for PP

·         Further progress was achieved towards the Group’s strategic shift towards more customer-centric products including more value-added primary and further processed products for the domestic market

·         A business transformation group was established tasked with improving the efficiency of business processes

Q4 2019                                               

·         Poultry production volumes for MHP excluding PP reached 188,784* tonnes, up 18% year-on-year (Q4 2018: 159,431 tonnes). Poultry production volumes of the European Operating Segment (PP) amounted to 23,321 tonnes

·         The average chicken meat price decreased by 14% year-on-year to UAH 34.69 per kg (Q4 2018: UAH 40.56 per kg) (excluding VAT). The average price of chicken meat produced by PP during Q4 2019 was 2.66 EUR per kg

·         Chicken meat exports totaled 87,651 tonnes (excluding PP’s 3,752 tonnes), increased by 20% (Q4 2018: 72,929 tonnes)

*- production volume of chicken meat only, without by-products

 

12M 2019

·         Poultry production volumes reached 728,917* tonnes, up 18% (12M 2018: 617,943 tonnes). Poultry production volumes of European operating segment (PP) amounted to 79,358 tonnes

·         The average chicken meat price decreased by 5% year-on-year to UAH 38.06 per kg (12M 2018: UAH 39.86 per kg) (excluding VAT). The average price of chicken meat produced by PP during 2019 was 2.64 EUR per kg

·         Chicken meat exports increased by 25% year-on-year to 357,433 tonnes (excluding PP’s 13,881 tonnes) (12M 2018: 286,846 tonnes) as a result of increased exports mainly to countries in MENA and the EU

*- production volume of chicken meat only, without by-products

 

FINANCIAL HIGHLIGHTS

Q4 2019

·         Revenue of US$ 551 million, an increase of 43% year-on-year (Q4 2018: US$ 385 million)

·         Export revenue amounted to US$ 316 million, 57% of total revenue (Q4 2018: US$ 263 million, 68% of total revenue)

·         Operating loss of US$ 2 million, down from a profit of US$ 29 million in Q4 2018; operating margin declined from 8% to 0%

·         Adjusted EBITDA margin (net of IFRS 16) decreased to 8% from 23%; adjusted EBITDA (net of IFRS 16) of US$ 43 million was down 51% year-on-year (Q4 2018: US$ 88 million)

·         Net loss for the period was US$ 60 million (Q4 2018: loss of US$ 14 million)

 

12M 2019

·         Revenue of US$ 2,056 million, an increase of 32% year-on-year (12M 2018: US$ 1,552 million) driven by an increase in sales of poultry meat, vegetable oils and convenience food, as well as by the acquisition of PP

·         Export revenue amounted to US$ 1,186 million, 58% of total revenue (12M 2018: US$ 924 million, 60% of total revenue), up 28% year-on-year from the continued strategy of geographic diversification of exports

·         Operating profit of US$ 216 million, down 31% year-on-year from US$  312 million;  operating margin declined from 20% to 11%

·         Adjusted EBITDA margin (net of IFRS 16) decreased to 18% (2018: 29%); adjusted EBITDA (net of IFRS 16) decreased to US$ 376 million versus US$ 450 million in 2018 driven by low commodity prices (both for crops and poultry) and the effects of adverse weather conditions, combined with the significant strengthening of the Ukrainian Hryvnia

·         Net profit for the period was US$ 215 million, compared to profit US$ 128 million for 12M 2018

 


 

FINANCIAL OVERVIEW

(in mln. US$, unless indicated otherwise)

 

Q4 2019

 

Q4 20181)

% change2)

 

12M 2019

 

12M 20181)

% change2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

 

 551

 

 385

43%

 

2,056

 

1,552

32%

IAS 41 standard gains/(losses)

 

(58)

 

(23)

152%

 

(40)

 

 32

-225%

 

 

 

 

 

 

 

 

 

 

 

Gross profit

 

 52

 

 67

-22%

 

 398

 

  422

-6%

Gross profit margin

 

9%

 

17%

-8 pps

 

19%

 

27%

-8 pps

 

 

 

 

 

 

 

 

 

 

 

Operating profit

 

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