MHP’s 1H11 results are in line with expectations

MHP (LSE: MHPC LI), a leading Ukrainian poultry producer, reported its 1H11 financial results this morning. Revenues were up 25% y-o-y to USD 527 mln, EBITDA was up 19% y-o-y to USD 158 mln (margin of 30%, down 1 pp y-o-y), and net income was down 16% y-o-y to USD 86 mln (margin of 16%, down 8 pp y-o-y). Chicken meat sales volumes in 1H11 increased by 8% y-o-y, while average price growth was only 2% y-o-y. The significant portion of top line growth came from higher revenues from sunflower oil sales, where the selling price rose 57% y-o-y. Construction at its Vinnitsya chicken farm, a key expansion project, is running on schedule and phase 1 is expected to be completed at the beginning of 2013. Yegor Samusenko: We deem reported results as neutral for the stock: the negatives of slow growth in chicken meat prices are to a larger extent offset by larger earnings in other segments. We remain positive on the stock and see it as one of the safest investments in the Ukrainian agriculture universe, given the current uncertainty over the soft commodities outlook and overall market volatility.