Ukraine-based poultry company, MHP SE increased its revenue 10% for the second quarter of the current financial year. This was despite an 11% year-on-year cut in the volume of its chicken production in the home market reported by the firm last month.
For the three-month period, chicken production amounted to around 170,400 metric tons (mt), which compares with almost 191,000mt for the same quarter of 2021. Meanwhile, revenue from the Ukrainian operation increased from US$542 million to US$595 million for the same periods.
As domestic chicken consumption was negatively impacted by the falling population remaining in Ukraine, their reduced incomes, and logistical challenges, MHP was able to recover some of the lost market through exports. However, at 68,552mt, these were down 23% year-on-year. Exports accounted for 56% of all revenue from the domestic operations to 53%. The firm’s exports from Ukraine were valued at US$333 million for the last quarter.
Compared to the same period of 2021, operating margin contracted by 72% for the three months just ended to US$67 million. MHP reports its operating margin down to just 11% compared with 44% in the second quarter of last year. Meanwhile, net income fell to just US$20 million for the quarter — down from US$232 million in the comparable period of 2021. At 19%, operating margin (as adjusted Earnings Before Interest, Taxes, Depreciation and Amortization; EBITDA) was down significantly from the 51% reported a year ago.
As well as domestic production, MHP also has a European operating segment. Based in the Balkans, this is the Perutnina Ptuj company. Over the second quarter of the current year, it achieved a 6% increase in chicken meant output to almost 31,260mt. With a 33% year-on-year increase, average selling price for the period was EUR3.36 (US$3.25) per kilo.
Half-year chicken production contracts in Ukraine, Europe
Compared with the more than 375,500mt produced by MHP’s Ukrainian company in the first six months of the 2021 fiscal year, chicken production contracted by 2.4% to around 346,000mt for the latest half-year. On the domestic market, MHP reported a 24% increase in the selling price of chicken to US$1.93 per kilo.
At less than 157,900mt, exports were down 17% year-on-year.
For the same six-month period, the European operation increased chicken by just over 10% to more than 59,800mt. Average price was EUR3.11 (US$3.00) per kilo — up from EUR2.51 a year ago.
At US$1.149 billion, MHP registered a 16% year-on-year improvement in revenue for the half-year. Proportion of all revenue from exports was up five percentage points at 56%. At U$640 million, exports for the period were 27% higher than the comparative period.
Despite these adjustments to the business to take account of the challenges arising from the Russian invasion since February, MHP reported its first-half operating profit down by 70% to US$76 million. Operating margin declined from 26% to 7%.
Challenging times for the company were exacerbated by unfavorable exchange rates. It reported a net half-year loss of US$89 million for the latest half-year. This included a foreign exchange loss of US$92 million, and compares with a US$51-million foreign exchange gain over the first half of 2021. Before exchange rate differences, MHP reported a US$3-million net profit for the first half-year of 2022. The comparable figure for this period of 2021 was US$182 million.
In July, MHP confirmed that sustainability would remain a priority for the company, despite its ongoing business challenges.
