MHP boosts poultry deliveries by 22% yoy in 1Q14

Ukraine’s leading poultry producer MHP (MHPC LI) reported increased sales of its chicken meat by 22% to 112.3 kt in 1Q14, according to its April 15 trading update. Chicken sales for export demonstrated spectacular growth yoy, rising 31% to 30.4 kt in 1Q14, despite the company being targeted for export ban to Customs Union countries since February 2014. Domestic deliveries also increased significantly: +20% yoy. At the same time, the average price of chicken meat decreased 4% yoy to UAH 15.6/kg in 1Q14, which the company has traditionally attributed to an increased share of exports, which are sold at a lower price.

The company did not provide figures for poultry output in 1Q14, just stating that the yoy increase was about 30% (it was 103.4 kt in 1Q13). MHP attributed its output growth to increased capacity load at its newly commissioned Vinnytsia complex, stating that it has commissioned 9 of 12 chicken rearing sites there and will add three more by the year end.

In other operations, MHP reported 37% yoy growth in sales of sunflower oil to 67.5 kt, while its average price declined 26% yoy to USD 853/t. Meat product deliveries declined 7% yoy, while their prices advanced 7% yoy.

Alexander Paraschiy: We welcome the company’s boosted chicken output, which seems to be in line with its initial plans to load newly commissioned capacities. At the same time, we view the drop in the average price of chicken meat as worrisome: given that the hryvnia devalued more than 10% yoy in 1Q14 on average, the company’s standard excuse, attributing low export prices, isn’t inspiring. The company avoided mentioning its Crimea operations in its update. We hope they’re fine, though the decline in meat products output may indicate some trouble: one of the company’s three facilities in this segment is located in Crimea.