MHP’s EBITDA grew 4% y-o-y to USD 133 mln in 1H10

Myronivsky Hliboproduct (LSE: MHPC LI) released 1H10 financials yesterday, posting 39% y-o-y top line growth to USD 423 mln as its poultry output grew by 45% y-o-y to 168.5 ths mt and the average 2Q10 chicken meat price increased by 12% on a q-o-q basis, albeit flat y-o-y at UAH 13.82/kg (ex-VAT). Consolidated 1H10 EBITDA was up 4% y-o-y to USD 133 mln, implying an EBITDA margin of 31% (vs. 42% in 1H09). Net income grew 14% y-o-y to USD 102 mln (net margin of 24% vs. 30% in 1H09). MHP’s total debt grew by 41% y-o-y to USD 736 mln, whereas net debt rose 6% y-o-y to USD 521 mln as a hefty USD 215 mln portion was kept in cash due to Eurobond covenant restrictions. Ruslan Patlavskyy: The reported financials were in line with our 1H10 estimates, while we forecast FY10 sales of USD 911 mln (+28% y-o-y), enhanced by 6.0-6.5% y-o-y growth in MHP’s poultry sale price and a 18% y-o-y increase in poultry output to 337 ths mt this year. We conservatively expect EBITDA of USD 284 mln (+5% y-o-y) or 5-11% below the management guidance of USD 300-320 mln for the year. We still view the potential risk of a lower corn harvest due to the summer drought as moderate, which would elevate poultry production costs due to external corn purchases this year.