MHP sees business begin recovery in third quarter

Following disappointing results for its poultry and meat businesses in the first half of the fiscal year 2020, Ukraine-based agri-food company MHP SE is reporting improvements in its third-quarter performance. The firm has also responded to allegation by local media reports that it was not paying its full tax obligations.

(Yurii Bukhanovskyi | Bigstock)
(Yurii Bukhanovskyi | Bigstock)

For its Ukrainian poultry business, MHP SE reports an 18% year-on-year increase in third-party sales for the third quarter (Q3) to over 195,000 metric tons (mt).

According to its unaudited results just published, this improvement helped to nudge sales for the first nine months of this year 2% above the figure for 2019.

While overall Q3 sales into the home market were hardly changed from last year at just over 86,600 mt, exports rose by 37% to around 108,500 mt. For the first 9-month period, 2020 exports are 3% higher year-on-year more than 279,000 mt.

Chicken prices tumble in Ukraine

Net of value-added tax (VAT), average prices were lower than last year, both for the Ukrainian and export markets, and in both Q3 and for the year so far.

Earlier this year, MHP reported disruption of its markets from avian influenza outbreaks in Ukraine, as well as the coronavirus (COVID-19) pandemic.

MHP explains that for its exports to the European Union, prices weakened for chicken fillets due to the sudden drop in demand. For the first nine months of 2020, the average remains 10% below the previous year, which is attributed to the differences in product mix between the two periods. The firm was able to divert some of its breast fillets to markets in the Middle East and North Africa (MENA).

According to MHP, prices on the Ukrainian market have fallen 11% year-on-year. This is attributed to the coronavirus-related market disruption, which resulted in a shift from fresh/chilled products to cheaper frozen chicken.

Higher prices for convenience foods, meat processing

For the first nine months of 2020, sales of MHP’s processed meats (sausages and smoked meats) remain 5% below the previous year’s level. The impacts of coronavirus on the hospitality (HoReCa sector) have persisted into Q3, the company reports. However, average prices for this sector are around 6% higher year-on-year.

For convenience foods, MHP’s sales held up better, and were 4% higher for the first 9 months of 2020 compared to the previous year. Average prices in this segment were stable.

Prices stable, output raised by MHP’s European poultry operation

Following its acquisition in early 2019, Perutnina Ptuj (MHP’s “European operation”) instigated a strategy to boost poultry meat production. This has included increasing capacity utilization at plants in Serbia and Croatia.

In Q3, this operation achieved a 6% increase in third-party sales compared to the previous year at just over 16,800mt. According to MHP, the total volume of chicken and turkey meat period for the quarter was 27,615 mt, which was a year-on-year improvement of 9%.

For the first nine months of 2020, the European operation produced 77,574 mt of chicken and turkey meat. Sales of poultry meat over the period were more than 47,800 mt.

As well as poultry meat, the European operation also produces processed meat products, including sausages and convenience foods. During Q3, this segment produced a volume of almost 10,300mt, while sales were 10,218mt. For the first 9 months of the year, these figure were reported as 29,221 mt and 28,853 mt, respectively. Average prices were hardly changed from the same periods of 2019.

MHP sets the record straight on media report

In response to a recent critical report in Ukrainian media, MHP states that it is a transparent and public company. Its shares are listed on the London Stock Exchange.

According to a statement, MHP is among the top 20 companies in Ukraine in terms of its overall tax payments. Operating entirely within the law, MHP refutes the allegation that evades taxes. The holding company comprises 40 operations based in 16 regions of the country.

More on MHP

With annual slaughterings of 478 million birds, MHP (formerly Myronivsky Hlibroproduct) is the third largest company in Europe, according to the Top 10 poultry companies in Europe, according to the WATTPoultry.com Top Companies Database. It is the Ukraine’s leading poultry producer.

One year ago, MHP announced the creation of a group of companies as part of a major business transformation.

Audited results for the second quarter (Q2) and first-half year (H1) of 2020 revealed the adverse impacts on MHP’s business of Ukraine’s avian influenza outbreak earlier this year, as well as COVID-19.

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