TRADING UPDATE FOR THE FOURTH QUARTER AND TWELVE MONTHS ENDED 31 DECEMBER 2019

30.01.2020

 MHP SE (LSE: MHPC), the parent company of a leading international agro-industrial group with headquarters in Ukraine, focusing primarily on the production of poultry and cultivation of grain, as well as other agricultural operations (meat processing and meat products ready for consumption) today announces its trading update 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”.

The operating results of the recently-acquired Perutnina Ptuj are shown separately as the European Operating Segment.

POULTRY AND RELATED OPERATIONS (MHP, excluding Perutnina Ptuj)

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.

Poultry production volumes in Q4 2019 increased by 18% to 188,784 tonnes (Q4 2018: 159,431 tonnes) and for 12M 2019 increased by 18% to 728,917 tonnes (12M 2018: 617,943 tonnes). These increases were driven by the launch of new rearing sites at Vinnytsia as well as increases in production of heavier chicken and a decrease in thinning.

Poultry

Q4 2019

Q4 2018

% change

12M 2019

12M 2018

% change

Sales volume to third parties, tonnes:

158,624

144,183

10%

669,964

593,527

13%

 

-       Domestic

 

70,972

71,253

0%

312,531

306,680

2%

-       Export

87,651

72,929

20%

357,433

286,846

25%

 

Full year sales of chicken meat increased by 13% to 669,964 tonnes consistent with the Company’s strategy of growing exports of poultry. However, due to the ban on exports to the Kingdom of Saudi Arabia (KSA) imposed in September 2019, exports were down around 5% on the total expected exports for the year. Full year poultry sales on the domestic market (both fresh and frozen) remained relatively stable and balanced year-on-year. 

Poultry Exports

Despite the challenges presented by the temporary ban on exports to the KSA market, chicken meat exports in Q4 2019 increased by 20% to 87,651 tonnes and in 12M 2019 increased by 25% year-on-year to 357,433 tonnes, allowing the Company to almost meet the planned annual volumes. This was achieved through active management of both geographic diversification and product mix optimization to the countries of the EU, MENA, CIS and Africa. Of total poultry sales volumes in 12M 2019, exports constituted around 53% vs 48% in 12M 2018.

Update on sales to KSA market: On 29 January 2020, KSA reopened its market to the import of Ukrainian poultry products (excluding products from the Vinnytsia region), so that MHP’s Myronivka poultry complex and meat-processing plant “Legko” have recommenced exports to KSA.

Poultry Prices

Poultry

Q4 2019

Q4 2018

% change

12M 2019

12M 2018

% change

 

 

 

 

 

 

 

Price per 1 kg net VAT

34.69

40.56

-14%

38.06

39.86

-5%

 

* Average official FX rate for Q4 2019 UAH/US$ 24.26 and for Q4 2018 UAH/US$ 27.95

   Average official FX rate for 12M 2019 UAH/US$ 25.84 and for 12M 2018 UAH/US$ 27.20

 

In Q4 2019 the average chicken meat price (blended domestic and export) decreased by 14% to UAH 34.69 per kilogram of natural weight (excluding VAT). In 12M 2019 average chicken meat price decreased by 5% year-on-year to UAH 38.06 per kilogram. The decrease in price year-over-year is mainly attributable to the substantial drops in poultry prices in the EU countries as well as revaluation of the local currency (UAH).

In USD terms, MHP’s  average poultry prices in Q4 2019 decreased by 12% year-on-year and in 12M 2019 decreased by 6% versus 2018.

Vegetable Oils

Sales volume, tonnes

Q4 2019

Q4 2018

% change

12M 2019

12M 2018

% change

Sunflower oil

112,688

74,108

52%

384,150

315,079

22%

Soybean oil

11,764

12,268

-4%

51,771

50,044

3%

 

In Q4 2019, MHP’s sales of sunflower oil increased by 52% year-on-year to 112,688 tonnes. For 12M 2019, sunflower oil exports increased by 22% to 384,150 tonnes over 2018 due to the increase in production of fodder mill as well as a change in delivery terms from DAP to FOB.

 

In Q4 2019, soybean oil export sales decreased by 4% year-on-year to 11,764 tonnes, and for 12M 2019 increased by 3% to 51,771 tonnes.

 

MHP also sells soybean cake to third parties.

GRAIN GROWING OPERATIONS

The grain growing operations of the Company harvested around 363,000 hectares of land and 2,407,589 tonnes of crops in 2019, around 9% lower than in 2018 mainly because 2018 was a historic record for the harvest of corn.

MHP has around 75,000 ha of winter crops planted, of which approximately 56% is sowed with winter wheat and 43% with winter rapeseeds. All winter crops are currently in good condition.

 

 

2019

 

 

 

2018

 

 

Production, tons

 

Cropped hectares

 

Production, tons

Cropped hectares

 

 

 

Corn

1,312,416

 

140,221

 

1,344,547

123,398

Wheat

300,396

 

46,797

 

295,640

48,379

Sunflower

237,755

 

65,447

 

235,245

72,981

Rapeseed

122,597

 

41,233

 

125,346

38,541

Soya

102,418

 

38,197

 

114,322

37,558

Other[1]

332,007

 

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