MHP EBITDA jumps 52% yoy in 1H21

EBITDA of Ukraine’s top poultry producer MHP (MHPSA,
MHPC LI) surged 52.2% yoy to USD 344 mln in 1H21, according to its Sep. 9
filing. The company’s poultry segment EBITDA rose 14.8% yoy to USD 140 mln,
while its grain growing EBITDA jumped 2.2x yoy to USD 161 mln in 1H21. The
company’s meat processing EBITDA increased 11.1% yoy to USD 10 mln, and its
EU-based facilities generated USD 32 mln in EBITDA, or 14.3% higher yoy in
1H21.

MHP’s net revenue rose 14.1% yoy to USD 989 mln in
1H21. Its bottom line turned to positive USD 232 mln (vs. negative USD 62 mln a
year ago) supported by a 2.7x surge in gains from change in fair value of
biological assets and USD 50.5 mln ForEx gains of in 1H21 (vs. USD 129 mln
ForEx losses in 1H20).

The company’s working capital outflow was USD 102 mln
vs. USD 123 mln outflow a year ago, and its net cash flow from operating
activities turned to positive USD 49 mln a year ago. Its CapEx increased 31.7%
yoy to USD 54 mln, mainly spent on maintenance and some modernizing of EU-based
facilities.

MHP’s net debt-to-LTM-EBITDA ratio was 2.82x as of
end-June, compared to 3.72x a year ago and 3.66x six month ago.

In 2Q21, MHP’s EBITDA surged 2.17x yoy (and 4.46x qoq)
to USD 281 mln due to strong EBITDA growth in all segments. The company’s
poultry segment generated USD 108 mln in EBITDA, which is 2.0x more yoy and
3.3x more qoq, and its grain growing segment generated USD 142 mln in EBITDA
(2.4x higher yoy and 7.5x qoq) in 2Q21.

The company guided its full-year 2021 EBITDA would
reach USD 600 mln, which is higher than it earlier anticipated (no previous
number has been provided).

Andriy Perederey: MHP’s
strong results in 1H21 were driven by the increase of protein prices and
expectation of record high harvesting results in Ukraine (supported by
favorable weather conditions in 2021). We expect the company will further
increase its poultry sales in 2H21 and will show positive annual poultry sale
dynamics. We estimate that the company’s EBITDA in the poultry segment will be
in the range of USD 260-270 mln in 2021 (vs. USD 194 mln in 2020). We see MHP’s
USD 600 mln EBITDA guidance in 2021 (up 52% yoy) is realistic now.