8 highlights from MHP’s first quarter of 2019

Ukrainian poultry company MHP on June 12 released the financial results of the first quarter of the 2019 fiscal year. The quarter ended on March 31.

Roy Graber Headshot
(Badboo | Bigstock)
(Badboo | Bigstock)

Ukrainian poultry company MHP on June 12 released the financial results of the first quarter of the 2019 fiscal year. The quarter ended on March 31.

Here are eight highlights from the report:

1. Net profit

The company’s net profit for the quarter was US$33 million, a decrease of 63 percent when compared to the profit of US$90 million for the same period of 2018.

That decrease was largely attributed to the impact of a non-cash foreign exchange translation gain higher depreciation charges related to the expansion of the Vinnytsia poultry complex.

2. Vinnytsia poultry complex

MHP completed the transition into live operations of two additional rearing sites as part of the second phase of the Vinnytsia complex. Chickens for processing at the complex are now being raised at five rearing sites.

3. Completion of Perutnina Ptuj acquisition

MHP completed the acquisition of a 90.69 percent stake in Slovenian poultry company Perutnina Ptuj. The price amounted to EUR221 million (US$250 million).

4. Poultry sales

MHP reported a 21 percent increase in poultry sales volume at 164,004 metric tons for the quarter. Prices remained consistent with those of the first quarter of the 2018 fiscal year.

5. Exports

The first quarter was a big one for MHP in terms of poultry exports. The company increased its exports by 47 percent on a year-over-year basis to 93,045 metric tons. Export revenue, meanwhile, increased by 65 percent to US$288 million, about 61 percent of the company’s total revenue for the quarter.

6. Grain growing operations

MHP experienced a loss of US$17 million on its grain growing operations for the quarter, representing a 55 percent year-over-year decline. The loss represents the net charge in the effect of revaluation of sunflowers, corn, wheat and soybeans as a result of lower levels of grain in stock due to internal consumption as a result of the harvest cycle and seasonality.

7. Meat processing operations

MHP’s sales volume of processed meat products declined 7 percent to 7,575 metric tons for the quarter. However, the smaller volume was offset by a 12 percent increase in price per kilogram.

8. Executive commentary

Dr. John Rich, MHP chairman, stated: “MHP has continued to deliver its growth strategy, with on-time and on-budget delivery of the latest phase of expansion in production capacity at Vinnytsia Poultry Complex and completion of an important strategic step with the acquisition of Perutnina Ptuj (PPJ). PPJ is an excellent company with strong management and a well-established presence in its major markets in the Balkans and southeast Europe. We see good opportunities to work with PPJ team to further develop their business as part of the MHP Group.

“Our financial results in the first quarter reflect significant growth in revenue as new production facilities have come on stream and include PPJ’s revenue since completion of the acquisition. Operating margins for the first quarter were adversely affected by the higher labor costs experienced since the second quarter of last year. Nonetheless, we remain confident in the prospects for the group, and our expectations for the full year remain unchanged.”

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