MHP poultry sales rise 4% yoy in 2Q16
19 July 2016
Ukraine’s largest poultry producer MHP (MHPC LI, MHPSA) reported a 4% yoy (+26% qoq) increase in 2Q16 poultry sales to 149 kt in a trading update published on July 19. The key driver of the strong sales was exports, which surged 36% yoy to 54 kt in 2Q16 (+70% qoq). During the quarter, the average selling poultry price in hryvnia terms inched down 1% qoq to UAH 29.2/kg, but slightly improved in dollars (less than 1% qoq to USD 1.16/kg) due to local currency appreciation.
In 1H16, poultry sales advanced 4% yoy to 267 kt, with the average selling price in hryvnia terms rising 11% to UAH 29.43/kg (a 7% yoy decline to USD 1.15/kg in dollars).
Other sectors also performed well. Record harvest yields were achieved for winter crops, while the harvest is ongoing. Sales of processed meat surged 44% yoy in 2Q16 to 10 kt, and 50% yoy in 1H16 to 18 kt. The average selling price for processed meat declined 9% yoy in 1H16 to USD 1.8/kg.
Roman Topolyuk: With its impressive sales in the second quarter, MHP is on track to selling around 600 kt of poultry in 2016, which we project by taking into account the expected ramping up of the new Myronivka and Oril complexes in 2H16. So our expectations on the company’s EBITDA of about USD 400 mln in 2016 (-13% yoy) remain viable. Recent hryvnia firmness and anticipated strong results from farming will contribute to those expectations.
As a result, we see the company’s total debt-to-EBITDA ratio at 3.2x (somewhat below the Eurobond covenant of 3.3x). As it is an incurrence covenant – which doesn’t have any punitive consequences and just merely caps MHP’s ability to raise new debt – the company’s solvency position looks to be solid at this stage. Our view on the Eurobond is neutral.
