MHP revenue remains flat, EBITDA decreases 11% in 9M16

Ukraine’s leading poultry producer and grain farmer MHP (MHPC LI, MHPSA) reported a mere 0.1% yoy growth in net revenue to USD 899 mln in 9M16, according to its filing today. Revenue in its flagship segment, poultry, increased 7% yoy to USD 763 mln as sales volume rose 6% yoy to 433 kt. Average domestic poultry prices remained broadly flat in USD terms, while export prices decreased by 18% yoy in 9M16, in line with global commodity trends. Revenue of MHP’s grain-growing segment plunged 56% yoy to USD 45 mln.

MHP’s EBITDA margin decreased to 38% in 9M16 from 43% a year before, while EBITDA decreased 11% to USD 340 mln. Net income was reported at USD 86 mln in 9M16 (compared to a USD 37 mln loss in 9M15). Its cash flow from operations before changes in working capital decreased 43% yoy to USD 149 mln. The company’s net debt declined to USD 1,160 mln as of end-September 2016, from USD 1,220 mln as of the year’s start. Its net debt/LTM EBITDA ratio increased to 2.82x as of Sept. 30 from 2.66x as of Dec. 30, 2015, but still remains within the Eurobond covenant limit of 3.0x

Igor Zholonkivskyi: The company posted rather solid results in the current environment of low poultry prices in Ukraine and low global commodity prices. The hryvnia’s stability will remain one of the key factors affecting the company’s profitability in 2017, while gradual macro recovery in 2017 in Ukraine should lead to a slight improvement in domestic poultry prices.  So far, MHP is well on track to meet its 2016 EBITDA guidance of USD 400-420 mln. Our view on the MHPSA Eurobond remains neutral.