MHP reports 20% growth in 2012 bottom line, promises dividends

Ukraine’s leading poultry producer MHP (MHPC LI) reported on March 5 a 15% yoy increase in net revenue to USD 1,408 mln in 2012. The company’s EBIDTA increased 17% yoy to USD 468 mln and net income advanced 20% yoy to USD 311 mln. The company’s key bottom line driver was its poultry segment, where EBITDA improved 30% yoy (to USD 376 mln) on a strong increase in average poultry prices (+15% yoy). The grain segment was the main contributor to the company’s top line increase, demonstrating 63% yoy growth in sales while the segment’s EBITDA showed a 7% yoy decline.

The company announced it intends to pay dividends for the first time in its history, preliminarily outlining USD 1.13/share (implying a dividend yield of 6.2%). MHP promises to release more details on the dividends in May 2013.

Alexander Paraschiy: The company’s results were above our estimates and are generally in line with the consensus. The company’s intention to pay dividends looks like a positive surprise, signaling that the company is close to finalizing its expansion projects. We look optimistically at MHP in 2013 as it is going to increase its poultry output significantly, following the commissioning of the first stage of its Vinnytsia project. The key concern, as we stated before, is whether the market will be able to digest the company’s 1.6x capacity increase planned for the coming years.