MHP revenue rises 18%, EBITDA gains 8% in 9M17

Revenue at Ukraine’s leading poultry meat producer and
farmer MHP (MHPSA, MHPC LI) rose 18% yoy to USD 970 mln in 9M17, according to
its Nov. 16 report. The company’s revenue from poultry sales improved 22% yoy
to USD 600 mln due to higher prices (a 18% yoy rise in USD terms) and higher
volumes (a 4% yoy increase). The MHP’s poultry export volumes advanced 23% yoy
to 176 kt in 9M17.

The company’s 9M17 EBITDA gained 8% yoy to USD 371
mln, with state subsidies contributing USD 40.9 mln to that result, more than
doubling from a year ago. Without state subsidies, the company’s EBITDA rose 2%
yoy. Its net profit more than doubled yoy to USD 257 mln in 9M17. MHP’s CapEx
increased 28% yoy to USD 92 mln, mainly due to continued construction of the
second phase of the Vinnytsia poultry factory.

MHP also revealed its outlook for corn and soybean
yields. The company expects that its corn yield will drop 10% to 7.7 t/ha and
soybean yield will fall 12% yoy to 2.2 t/ha.

In 3Q17, MHP’s revenue improved 15.3% qoq to USD 370
mln, while EBITDA fell 39.3% qoq to USD 105 mln due to the low contribution of
its farming segment (which plunged 97.8% qoq to USD 2 mln). Its poultry segment
EBITDA climbed 17.6% qoq to USD 100 mln due to higher selling prices (which
swelled 18% qoq in USD terms), which were partly offset by lower poultry sales in 3Q17.
Also, the company received USD 17.1 mln in government subsidies in 3Q17, or
13.1% less qoq.

Andriy Perederey: Among the
key drivers in MHP’s EBITDA improvement were higher poultry prices, in both
local currency and USD terms, as higher poultry export volumes supported higher
selling prices. State subsidies also had a significant effect on the company’s
EBITDA and the potential for reduced subsidies in the future could have a
strong impact. But the subsidy regime introduced in 2017 for meat, fruit and
vegetable producers will continue until the end of 2022. So we keep unchanged
our expectation that MHP will be able to generate USD 440-450 mln in EBITDA in
2017. We maintain our neutral view on MHP Eurobonds.