MHP’s poultry sales down 14% qoq, dollar price advances 2.5% qoq
2 February 2016
Ukraine’s largest poultry producer MHP (MHPSA, MHPC LI) sold 130 kt of chicken meat in 4Q15 (+1% yoy, -14% qoq), according to its Feb. 2 report. Its poultry production amounted to 146 kt (+3% yoy, -6% qoq) in the quarter. In the full year 2015, its poultry sales came in at 537 kt (+2% yoy) and poultry output grew 4% yoy to 567 kt.
The export positions of MHP weakened somewhat, as chicken meat exports declined 6% yoy in 2015 to 132 kt (down 9% qoq in 4Q15), which MHP explained with decreased exports to CIS countries, caused by weakening currencies in the region, as well by the export ban to Kazakhstan. Meanwhile, MHP expects to start exports to Saudi Arabia within next 3 months. Ukraine obtained a permit to supply poultry to the country in September 2015.
In positive news, MHP’s average poultry selling price advanced 8% qoq to UAH 29.7/kg in 4Q15, following a couple of quarters of flat prices. The price inflation even outpaced hryvnia devaluation during the quarter, which in 4Q15 reached 5%. This caused the selling price in dollars to increase 2.5% qoq to USD 1.30/kg. In 2015, the average selling price of poultry declined 24% yoy to USD 1.27/kg.
MHP reported that it harvested 1,891 mmt of crops in 2015 (down 7% yoy), as a 29% yoy decrease in corn production dented performance. A 28% yoy decline in corn yield to 6.7 tonnes per hectare, which is still 18% higher than Ukraine’s average, caused the decline in corn production.
Roman Topolyuk: Production of 567 kt of poultry in 2015 implies a very high (98%) capacity load, though the result came in lower than the preliminarily guided number, closer to 600 kt. We expect the 14% qoq decline in poultry sales in 4Q15 will have been partially offset by the advance of the dollar price of poultry during the quarter, and the hryvna’s devaluation might have positively impacted the financials of MHP’s farming. As a result, we estimate the company’s EBITDA in 4Q15 will be reported close to the 3Q15 level (USD 110-116 mln), and annual EBITDA to reach USD 496-502 mln (vs. USD 555 mln in 2014). We see MHP’s total debt to LTM EBITDA is in a relatively safe position of 2.41-2.44x compared to the Eurobonds covenant of 3.0x.
