MHP releases Q1 2016 operating report

19 April 2016

MHP reported rather good operating results for Q1, notably showing increase of export operations in poultry (which is main target of the company at the moment) and sunflower oil segments.

Total volume of Q1 poultry production in natural terms made 155.6k tons (+11% to corresponding period of previous year), poultry sales to 3rd parties 117.7k tons (+4% vs. Q1 2015) and, most important was increase of export of poultry products by 23% vs. Q1 2015 up to 32k tons. In last quarter export made 27% of total MHP poultry sales. Since the beginning of Y2016 MHP has been introducing its new strategy of control over export volumes, by establishing sales offices in the primary export markets (firstly EU and Saudi Arabia). It is expected to positively influence volume of sales on the target export markets in the future.

Also according to report, despite decline of export to CIS countries in last reporting period by 30%, MHP significantly increased export to MENA (by 74%), EU (38%) and Africa (4 times). As a reminder, management of MHP decided to postpone realization of its Vinnitsa Investment Project second stage (earlier planned to be started in Y2016), until export operations at new destinations EU and MENA - will be increased (new volumes of production are to be mainly exported), so that current export operations dynamics are quite important for the company future development in general.

Average UAH price for chicken meat in Q1 2016 increased by 17% (up to UAH 29.6 per 1 kg) vs. Q1 2015 (at that price almost unchanged vs. Q4 2015). Using its good market positions the company tries to increase realization prices on domestic market.

Sunflower oil sales of MHP in Q1 made 82.7k tons, by 24% higher than in Q1 2015. Sunflower oil realization is important as it is one of main sources of FX proceeds for the company, which is generally exposed to FX risk (55% of total sales in Y2015 was realized on domestic market). On positive are reported good conditions of winter crops. Sown area under winter crops in current year made 97.3k ha, thereof 60% - under wheat, 23% - winter rapeseeds.

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