MHP releases Q4 2016 operating report

26 January 2017

In latest reporting quarter and Y2016 as a whole one of the largest Ukrainian agri-holdings demonstrated generally good operating results with growth of main performance figures.

Q4 2016 Q4 2015 Change, % Y2016 Y2015 Change, %
Poultry sales, tons 142 580 129 610 10% 575 740 537 290 7%
thereof export, tons 48 390 31 480 54% 193 640 132 080 47%
Price per 1 kg, UAH 33.0 29.7 11% 30.5 27.8 10%
Vegetable oil sales, tons 98 010 72 745 35% 376 390 300 695 25%

In last reporting quarter volumes of MHP poultry realization showed good dynamics, increasing y-o-y by 10% up to 142.6k tons. As a result, for the whole Y2016 period poultry sales in tons made 575.7k tons (+7.2% y-o-y). In line with plans of the company export of poultry is booming in last quarter it grew by 54% (vs. Q4 2015), in Y2016 by 47% vs. previous year up to almost 194k tons. As a result the share of export sales in total poultry realization volume of MHP in last year made 33.6% vs. less than 25% in Y2015. MENA and EU markets remain target ones for the company (in the beginning of December EU imposed import ban for Ukrainian poultry due to registered in Ukraine cases of bird flu, now MHP works on its partial removal/regionalization).

Average poultry price in Q4 2016 made USD 1.27/ton, which is just slightly lower (in UAH terms higher because of UAH devaluation) than in Q4 2015, but higher vs. both Q3 2016 (USD 1.19/ton) and average for Y2016 (USD 1.2/ton, -6% vs. Y2015) figures. Average export price of MHP in Y2016 declined y-o-y by 16%, domestic just by 2-3%. Basing on our opinion, being clear market leader among Ukrainian poultry producers (58% of industrial poultry production in Y2016), current strategy of the company is to increase prices and, therefore, marginality of its domestic sales (despite domestic realization in tons declined by around 6%, as was noted, MHP is concentrating its efforts on export sales growth, so decline of domestic realization is not a point of concern for us).

The share of MHP in Ukrainian poultry export in Y2016 made more than 80%.

Additional positive factor mentioned in report is increase of vegetable oils production and sales. Sunflower oil realization in Y2016 grew by 19% y-o-y (up to 342.2k tons, 100% is export, the share of MHP in Ukrainian sunflower oil export in Y2016 made 7%), soybean oil by almost 2.5 times (34.1k tons). At the moment MHP soybeans crushing capacities (launched in H2 2015) are loaded by 80% vs. 50% in the beginning of Y2016.

Good results were demonstrated by farming segment of the company with yields of main of crops much higher y-o-y:

Season 2016/2017 2015/2016 2014/2015
Corn
Sown area, ha 123 350126 138126 840
Yield, t/ha 8.66.89.3
Wheat
Sown area, ha 58 81553 75243 020
Yield, t/ha 6.56.06.1
Sunflower seeds
Sown area, ha 67 40057 45149 550
Yield, t/ha 3.23.13.4
Rapeseeds
Sown area, ha 20 07022 65310 495
Yield, t/ha 3.43.43.8
Soybeans
Sown area, ha 41 16535 83125 460
Yield, t/ha 2.41.62.1
Total sown area, ha 355 000340 000290 000

Basing on presented figures increase of segments profitability in Y2016-H1 2017 is expected.

Financial report of MHP for Y2016 is to be published on March 15.

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