MHP poultry sales jump 18% yoy in 3Q20

Ukraine’s largest poultry producer MHP (MHPC LI, MHPSA)
sold 195.1 kt of poultry meat in 3Q20, which was 17.6% yoy growth (and a 14.2%
qoq increase), according to its Oct. 21 trading update. The company’s poultry
exports jumped 37.0% yoy to 180.5 kt (up 22.6% qoq), while domestic sales were
almost flat yoy (or 5.1% qoq growth) in 3Q20. MHP’s poultry meat sales at its
EU-based facilities were 16.8 kt, or 5.6% more yoy (and up 6.0% qoq) in 3Q20.

During the quarter, the average poultry selling price
dropped 11.0% yoy to USD 1.36/kg (and 7.1% increase qoq). That implies MHP’s
revenue from poultry sales rose 3.3% yoy to USD 265 mln in 3Q20. MHP’s EU-based
facilities average selling price was EUR 2.48/kg, or 6.4% lower yoy (and 0.8%
lower qoq) in 3Q20.

In 9M20, MHP’s poultry sales increased 2.4% yoy to
523.8 kt, while the average selling price declined 9.5% yoy to USD 1.34/kg. The
company’s export sales volumes rose 2.5% yoy to 279 kt and domestic poultry
sales increased 1.3% yoy to 244.7 kt in 9M20.

MHP’s expectations for 2020 spring crop yields are
about 5.9 t/ha for corn (37% lower yoy) and about 2.9 t/ha for sunflower (19%
lower yoy). Also, the company’s wheat yield declined 20% yoy to 5.1 t/ha in
2020.

Andriy Perederey: The
company’s poultry sales in 9M20 were supported by strong operations in 3Q20 and
offset the negative influence of the avian flu in Ukraine in 1Q20. The
company’s 3Q20 results support our expectations that MHP will show positive
annual poultry sales dynamics in 2020. Also, the poultry sales increase will
support its P&L despite a lower selling poultry price and we expect that
MHP’s EBITDA from poultry operations could reach USD 290 mln in 2020 (vs. USD
281 mln in 2019). On the other hand, a heavy drop in crop yields will put
pressure on MHP’s total EBITDA in 2020 and we expect that the company’s key
P&L metrics will worsen yoy in 2020. So, we remain neutral on MHP
Eurobonds.