26 September 2022

In August the biggest Ukrainian poultry producer continued to demonstrate robust operating performance figures with m-o-m growth in key segments.

Total poultry production increased by 12% vs. July and made 58.2kmt. It is still by 10% lower than production in August 2021, but taking into account all the circumstances, we consider such a result as quite good. Poultry production capacity utilization after decrease to 75% in March, in further months recovered to about 85% and then stays relatively stable.

MHP poultry production dynamics during March-August 2022 is presented on the following chart:

Poultry sales volume (57.3kmt) remained relatively unchanged vs. both previous month and August 2021. Since March till August MHP sales of poultry made 257.9kmt, by 15% lower y-o-y, export sales – 132kmt (-26% y-o-y). As for all Ukrainian exporters, since the russian invasion in February, main challenge for MHP was to develop alternative routes for its export, and monthly poultry export dynamics of the company confirms that it successfully deals with all the challenges:

Despite the war the company significantly increased its sunflower oil sales – during April-August it made 96.2kmt, +76% y-o-y. We see main reason of such dynamics in availability of raw materials for oilseeds crush as a lot of competitors suspended its crushing and sunoil export activity. In contrast to pure oilseeds crushers and exporters, for MHP logistics costs per 1 ton are not so important due to available margin in poultry business (sunoil is just considered as by-product).

To confirm above we can note that, as per latest financial report of MHP, its EBITDA In Q2 2022 made $119M.

As poultry sales prices in July-August stay at above $2/kg (vs. $1.7-1.8/kg in the same period last year), and as the company reports good yields for its early grains crops (winter wheat yields made 5.5t/ha, rapeseeds – 3.8t/ha), we expect improvement of MHP financial performance in Q3 2022.