MHP revenue rises 27% yoy in 1Q17

The first-quarter revenue of Ukraine’s leading poultry producer and farmer MHP (MHPSA, MHPC LI) was up 27% yoy to USD 279 mln, according to financial statements published on May 23. Its export revenue amounted to USD 164 mln, which is 59% of  total revenue (vs USD 115 mln, 52% of the total revenue in 1Q16). MHP’s poultry production segment accounted for 85% of total revenue.

The company’s EBITDA improved 2% yoy to USD 93 mln, while the net profit stood at USD 57 mln (vs USD 56 mln loss in 1Q16).

MHP’s 1Q17 poultry production volumes decreased 1% yoy to 142 kt, while the average chicken meat price increased 15% yoy to UAH 31.5/kg or 8% yoy in US dollar terms. Domestic poultry sales remained mostly flat at 74.8 kt (vs 76.6 kt in 1Q16), while export sales increased 60% to 49.2 kt yoy.

The company’s end-1Q17 Net Debt stood at USD 1,063 mln, while its Net Debt to LTM EBITDA ratio improved to 2.55x from 2.98x last year.

The company also reported that it started the construction of Phase 2 of the Vinnytsya complex, which is planned to be launched in the middle of 2018 with expected production volume at around 40 kt in 2018).

Igor Zholonkivskyi: We see it a as a positive sign that MHP continues to expand its poultry export share, which makes the company more resilient to local currency risks. Following the issue of its new Eurobonds maturing in 2024, the company’s financial position remains stable and it has enough cash to finance the construction of its new poultry complex. However, with domestic demand remaining flat, the question remains of how successful the company will be in finding new markets abroad to match the increased production capacities in the future. 

For 2017, we expect MHP to post solid performance, likely finishing the year with EBITDA in the USD 430 – 440 mln range (vs USD 415 mln in 2016). This should allow MHP to comfortably service its debt and keep the dividends on at least the same level as last year (USD 80 mln). Our outlook for MHPSA Eurobonds remains neutral.