MHP poultry sales rise 11% yoy in 3Q16
18 October 2016
Ukraine’s largest poultry producer MHP (MHPC LI, MHPSA) sold 166.3 kt of poultry meat in 3Q16, an increase of 11% yoy and 12% qoq, according to its Oct. 18 trading update. The key driver of the strong sales was exports, which surged 70% yoy to 58.6 kt in 3Q16 (+8% qoq). During the quarter, the average selling poultry price was UAH 30.23/kg, which is 9% higher yoy and 4% better qoq. The price growth was also driven by exports, which rose to 35% of total sales in 3Q16, from 23% a year before, MHP reported. In dollar terms, average poultry prices fell 6% yoy to USD 1.19/kg, we estimate using the average official exchange rate.
In 9M16, MHP’s poultry sales advanced 6% yoy to 433.1 kt, with average selling price in hryvnia terms improving 10% to UAH 29.2/kg (but declining 7% yoy in USD terms to USD 1.17/kg, we estimate).
The company’s processed meat sales increased 37% yoy to 29 kt in 9M16 and the average selling price for meat in 9M16 declined 7% yoy to USD 1.84/kg.
MHP also reported its harvest results of early crops, declaring wheat yields at 6.5 t/ha (an 8% yoy increase) and rapeseed yield at 3.4 t/ha, the same as a year before. Its interim yields for corn and soybeans are 1.3x-1.5x better than reported a year before.
Andriy Perederiy: With its poultry sales in 3Q16, MHP is on track to selling around 600 kt of poultry in 2016, which we project taking into account the expected ramping up of its new Myronivka and Oril complexes in 4Q16. That said, our expectations regarding the company’s EBITDA of about USD 400 mln in 2016 (-13% yoy) is more viable now.
As a result, we see the company’s total debt-to-EBITDA ratio at 3.2x, just below the Eurobonds covenant of 3.3x. As it is an incurrence covenant – which doesn’t have any punitive consequences and merely caps MHP’s ability to raise new debt – the company’s solvency position looks solid at this stage. Our view on the MHPSA Eurobond remains neutral.
