Ukraine’s largest poultry producer, MHP SE, reports year-on-year improvements in overall revenue and profitability for the third quarter of the fiscal year. However, additional costs attributed to the war are higher than ever, and 12% of its workforce have joined the armed forces.
For the first nine months of this year, MHP SE reports its overall revenue at US$2.62 million — down slightly from US$2.29 million in the comparable period of 2023. As at the same point last year, 60% of the group’s total revenue was derived from exports, at close to US$1.37 million.
Significant improvements are reported in profitability of MHP’s businesses. At US$346 million, operating profit increased 40% year-on-year, while operating margin was up four percentage points to 15%. Driven by better results from the Agriculture operations, adjusted Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) was 33% higher year-on-year at US$437 million.
Net profit for the year to the end of September was US$141 million. This was driven by the improvement in operating profit. However, the firm reports that this metric was constrained by a US$98-million non-cash foreign exchange loss for the three quarters, when there had been a small foreign exchange gain during the same period of 2023.
As well as its home market of Ukraine, MHP has poultry operations in Slovenia — the Perutnina Ptuj (PP) company, which it acquired in 2019.
At more than 533,740 metric tons (mt), the group’s output of poultry meat for the January-September period of 2024 in Ukraine was 2.3% lower than in the same period of the previous year. However, production by PP was 8% higher at almost 108,000mt.
Average poultry meat prices for the nine months were up 4% year-on-year for the Ukrainian operations at US$2.01 per kilo, while PP reported a slight weakening to EUR3.51.
At a little over 276,300mt, MHP’s poultry exports from Ukraine were down 11% compared with the first nine months of 2023.
Third-quarter business developments
For the July-September period, a 10% dip in poultry meat production in Ukraine was partly balanced by an 11% year-on-year increase in output by PP. While MHP reports average prices were unchanged for PP, the Ukrainian business recorded a 6% increase in average price.
Exports from Ukraine were 9% lower for the three months than in the comparable period of 2023.
Overall group revenue was 5% higher at US$773 million. At US$415 million, export revenue for the quarter was up slightly year-on-year, but its share of overall revenue slipped by two percentage points to 54%.
Year-on-year, operating profit for the quarter was up by 62%, and operating margin improved to 20%.
At US$173 million for the three months, MHP attributes a 56% reported improvement in adjusted EBITDA to better performance by its non-poultry agriculture operations.
Impacts of war on MHP’s operations
Despite the invasion of Ukraine by the Russian Federation in February of 2022, MHP reports its operations have remained resilient.
For the group, the focus remains on ensuring business continuity, and addressing workforce challenges, including employee safety..
Official figures indicate that the Ukrainian workforce has contracted by 12% since the start of hostilities. MHP says 12% of its employees — around 3,300 people — have been mobilized into the armed forces.
For the year to date, the group reports its war-related costs at US38 million — US$15 million more than in the same period of 2023.
More on MHP
With 704 million birds slaughtered, MHP is easily the leading poultry producer in Europe, according to WATTPoultry.com’s Top Poultry Companies survey in 2023. It accounts for around 30% of the commercial chicken production on its home market, Ukraine.
With a range of interests in the agri-food sector, poultry accounts for around half of the company’s revenue.
Two months ago, it was announced that the Saudi Agricultural and Livestock Investment Company (SALIC) had acquired more than 13 million shares in MHP. As a result, SALIC holds a 12.6% stake in the Ukrainian agri-food group.
