MHP poultry sales slid 3% yoy, USD price up 6% qoq in 2Q18

Ukraine’s largest poultry producer MHP (MHPC LI,
MHPSA) sold 153.1 kt of poultry meat in 2Q18, a 2.6% yoy drop (and a 13.2% qoq
increase), according to its July 18 trading update. The decrease was driven by
both export and local sales, as export sales slid by 1.7% yoy (or 11.1% qoq
increase) to 70.1 kt and local sales decreased 3.7% yoy (or 14.6% qoq increase)
to 82.7 kt in 2Q18.

Exports accounted for 46% of total company poultry
sales in 2Q18 (from 45% a year ago). During the quarter,
the average selling poultry price in UAH terms rose 1.5% qoq to UAH 39.4/kg and
improved in USD terms by 6.0% qoq to USD 1.50/kg.

In 1H18, MHP’s poultry sales increased 2.0% yoy to 288
kt, as the average selling price in UAH terms advanced 21.1% yoy to UAH
39.2/kg, or a 21.1% yoy increase in USD terms to USD 1.46/kg. Also, MHP
launched the second phase of the Vinnytsia Poultry Complex in 2Q18. The company
is continuing its harvesting campaign of winter crops, so about 45% of the land
under winter crops was harvested, with the yields in line with MHP’s
expectations. The spring crops are in good condition, according to the
company’s trading update.

Andriy Perederey: MHP’s stable poultry sales volumes, with an increase in the share of
exports in total sales and an improvement of poultry prices, in both local
currency and USD terms, will drive the company’s financial results in 2Q18. We
expect that the poultry segment will contribute about USD 174 mln to the
company’s EBITDA in 1H18, or 2% more yoy. Also, the good crop conditions of
spring crops and good yields of winter crops should have reduced the risk of
lower farming segment results. We remain bullish on MHP stock and neutral on
its Eurobonds.