MHP reports 5% decline in 2019 EBITDA

Ukrainian farmer and leading poultry producer MHP
(MHPC LI, MHPSA) reported a 32.5% yoy surge in revenue to USD 2,056 mln and a
5.1% yoy decrease in EBITDA to USD 427 mln, while the company’s adjusted EBITDA
(net of IFRS 16) dropped 20.5% yoy to USD 376 mln in 2019, according to its
Apr. 14 financial report.

The company’s poultry segment EBITDA declined 9.6% yoy
to USD 281 mln, while its EBITDA/kg decreased 22.6% yoy to USD 0.41 in 2019.
Its farming segment EBITDA declined 27.8% yoy to USD 109 mln (while adjusted
EBITDA net of IFRS 16 plummeted 60.3% yoy to USD 60 mln) in 2019. The company’s
meat processing segment EBITDA jumped 25.0% yoy to 20 mln, while its EU-based
facilities generated USD 44 mln in 2019.

MHP’s net income jumped 68.0% yoy to USD 215 mln in
2019. The company’s operating cash flow before capital changes rose 1.3% yoy to
USD 310 mln, while working capital turned to positive USD 192 mln vs. negative
USD 45 mln a year ago. The company’s CapEx plunged 55.2% yoy to USD 113 mln.
Its total debt increased 10.2% yoy to USD 1,480 as of end-2019 and its
net-debt-to-EBITDA ratio worsened to 3.01x vs. 2.51x a year ago.

In 4Q19, the company’s revenue rose 43.1% yoy to USD
551 mln (sliding 1.61% qoq), while its EBITDA dropped 20.5% yoy to USD 70 mln,
or a 35.8% decline qoq in 2019.

Also, the company board of directors approved an
interim dividend of USD 30 mln.

Andriy Perederey: MHP’s
EBITDA decrease was in line with its forecast of about 15%
lower yoy. But EBITDA was lower than our expectation of USD 480 mln in 2019.
The drop was the result of a poultry export ban caused by the avian flu, weaker
poultry and crop prices and the hryvnia’s strengthening.

On the other hand, the company’s cash flow from
operations grew slightly. It reported it expects to boost its production
volumes by 25 kt at its EU-based facilities and by 10 kt at the Vinnytsia
poultry complex and deliver a strong financial result in 2020.