MHP reports 11% growth in 2017 EBITDA

Ukraine’s leading poultry producer MHP (MHPC LI,
MHPSA) reported a 13% yoy increase in revenue (to USD 1,280 mln) and 10.6% yoy
EBITDA growth to USD 458.6 mln in 2017, according to the company’s annual
results released on March 7. VAT refunds helped the company generate an
additional USD 52.6 mln (55% yoy growth), or 11.5% of its EBITDA. 

The company’s operating cash flow before working
capital changes increased 14.7% yoy to USD 433.6 mln, but cash flow from
operations (before profit tax and interest) decreased 30.9% yoy to USD 314.0
mln due to working capital replenishments of USD 119.6 mln. The company’s net
income rose 3.3x yoy to USD 230.0 mln in 2017. The company’s net debt decreased
4.6% yoy to USD 1,031 mln as of end-2017 and its net debt-to- EBITDA ratio
improved to 2.25x (from 2.60x a year ago).

The company’s board of directors approved the payment
of an interim dividend in the total amount of USD 80 mln, or USD 0.7492 per
share, which will be paid to shareholders by the end of April 2018.

MHP’s core segment, poultry meat, generated USD 1,051
mln in net revenue, or a 10% yoy increase. The segment’s EBITDA swelled 37% yoy
to USD 367 mln, while EBITDA per kg increased 31% yoy to USD 0.64. The
company’s farming segment generated USD 95 mln (a 37% yoy decrease) in total
EBITDA, while its meat-processing segment’s EBITDA increased 19% yoy to USD 19
mln.

Andriy Perederey: MHP’s EBITDA was close to our bottom estimate range of USD 460-470 mln. In 2018, we expect MHP will improve its financial
results by boosting poultry volumes by 40 kt and increasing its export sales by
45 kt. At the same time, we expect VAT refunds will be at the same level as
last year. Also, we expect improvement in the company’s farming segment EBITDA
in 2018 due to better weather and the solid condition of winter crops.