For the first half of its fiscal year, Ukraine-based agri-food group MHP SE reports good operational and financial performance, despite the challenges of the ongoing conflict in the country.
Driving the positive business developments over the six months to June 30, 2023 have been a recovery in exports and stable poultry prices, according to MHP SE, Furthermore, it reports, demand for its products has been maintained, and the introduction of new products in the Ukrainian market have supported these developments.
However, results in the comparative period of 2022 were greatly affected by disruption since the start of the war, MHP notes. Furthermore, the challenges resulting from the invasion are on-going, creating significant business uncertainty.
For the latest quarter to the end of June, MHP reports a 36% year-on-year increase in revenue to US$809 million. Of this total, exports account for 63% — up from 56% in the same period of 2022.
While operating profit increased marginally, operating margin fell from 11% in the comparable period to 8% for the latest three-month period. Meanwhile, adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was 8% lower year-on-year at US$109 million.
Similar developments were reported in the group’s financial performance for the half-year (January-June 2023). For this period, total revenue increased by 35% year-on-year to US$1,555 billion. The actual and changes in the percentage of exports were the same as for the latest quarter, giving a total of US$973 million for the first half of the current year. In contrast to the past three months, however, operating profit, operating margin, adjusted EBITDA, and adjusted EBITDA margin all improved for the year so far compared with 2022.
Recovery in MHP's Ukrainian chicken business
For the first half of 2023, MHP reports a 22% increase in chicken meat sales to third parties to more than 365,600 metric tons (mt). This is the result of a partial recovery in both domestic and export sales compared with the same period of last year, which covered the initial invasion of the country. Home-market sales were 8% higher year-on-year, while exports increased by 34%. MHP notes that while prices in Ukraine were 9% higher year-on-year for the second quarter, stabilization of the international markets led to an average 16% reduction in export prices over the same period.
In contrast, conflict-related challenges were blamed by the group from a 34% contraction in sales of its processed meat products for the half-year. Among the consequences was the temporary suspension of production at its “Ukrainian Bacon” facility. However, selling prices in this category averaged 49% higher as the result of changes to the firm’s product mix, as well as higher raw material costs.
For MHP’s convenience food business, sales volume was reported up by 54% year-on-year to 11,437mt for the first six months of the current year. Average prices increased by around the same percentage over this period.
For the January-June period, MHP recorded an increase of more than 200% in sales of its sunflower oil to almost 246,000mt. At just over 28,000mt, soybean oil sales to third parties were 43% higher than in the same period of 2022.
Higher sales, prices reported for European operation
MHP also reports year-on-year increases in sales for its European business, Perutnina Ptuj Group, which operates in the Balkan states.
Recent expansion of its facilities in Croatia and Serbia resulted in a 12% increase in poultry sales for the second quarter to almost 22,000mt. For the half-year, the increase was 10% to more than 41,000mt. Average sales prices were up 12% year-on-year for the half-year, but down slightly when comparing the second quarters.
At around 11,300mt, third-party sales of processed meat products by the European operation for the April-June period were up by 10% year-on-year. Comprising sausages and convenience foods, this sector achieved the same percentage increase in average price for the half-year to EUR3.32 per kilo.
More on MHP
With annual slaughterings of around 700 million birds, MHP is among the Top 10 global poultry producers, according to the WATTPoultry.com’s Top Poultry Companies survey. This output makes it the leading Europe-based company in this sector, according to this source.
From its headquarters in Ukraine, MHP SE operates a vertically integrated poultry business in its home base — as well as grain and oilseed production — and the Perutnina Ptuj Group, a chicken producer in the Balkans. From feed milling and hatching to further processed products, the latter entity specializes in integrated poultry production at facilities in Slovenia, Croatia, Serbia, and Bosnia and Herzegovina.
Earlier this month, MHP announced it had agreed to a closer partnership with the Tanmiah Food Group of Saudi Arabia. This aims to increase domestic poultry production in the Kingdom, and thus improve national food security.