MHP releases Q3 2017 operating report

22 October 2017

Due to low poultry production stocks as of beginning of reporting period, the company significantly decreased poultry sales in tons, which is to be offset by the growth of average selling price.

Q3 2017 Q3 2016 Change, % 9m 2017 9m 2016 Change, %
Poultry sales, tons 134 885 154 965 -13% 419 080 403 390 4%
thereof export, tons 52 990 57 525 -8% 176 015 142 790 23%
Price per 1 kg, UAH 37.9 28.1 35% 34.1 27.7 23%
Vegetable oil sales, tons 85 036 99 905 -15% 266 356 274 370 -4%
*-starting from Q1 2017 MHP reports its poultry production and sales basing on real physical weight of meat (before 2017 the company used adjusted weight when reporting on chicken meat sale/ production a whole chicken equivalent weight, incl. both meat and offal).

In Q3 2017 total poultry production by MHP made 137k tons (almost flat y-o-y), capacity utilization remained close to 100%.

Despite stable production figures, chickens sales by the company in reporting period (135k tons) have been lower both y-o-y (-13%) and vs. previous quarter (-14%). Reason low finished products stocks as of beginning of the quarter (in the beginning of July17 they have been by more than two times lower than a year ago), which resulted from active sales in H1. In total in 9m 2017 MHP poultry sales made 419k tons (+4% vs. previous year):

MHP poultry sales Q3 2017

We note that both domestic and export sales decreased in last reporting quarter domestic by 16% y-o-y, export by 8% y-o-y. As for export, the company clearly follows its strategy of selling abroad poultry products with higher added value during last months one can see increase of average Ukrainian poultry export prices (MHP accounts for about 80% of Ukrainian poultry export).

Significant decrease of poultry supply on domestic market (taking into account large market share of MHP, decrease of MHP sales largely influenced total supply) allowed MHP to increase average poultry selling prices. In reporting quarter average poultry price of MHP made UAH 38/kg, a year ago UAH 28/kg (so y-o-y growth comprised 35%, vs. previous quarter 17%).

We also note that in Q3 2017 MHP considerably (-15% y-o-y) decreased sales of vegetable oil. Explanation of the company increase of oil content in the feed which resulted in better feed conversion ratio. For 9m 2017 total MHP vegetable oil sales amounted to 266k tons (-4% y-o-y).

As for Farming segment, in its report the company disclosed yields of its main crops for the current season. Wheat net yield made 6.1t/ha (vs. 6.5t/ha in Y2016), sunflower seeds - 3.2t/ha (flat y-o-y), rapeseeds - 3.3t/ha (3.4t/ha). Expectation for soybeans yield 2.3t/ha (2.4t/ha), corn 8.0t/ha (8.6t/ha). Expected by MHP management EBITDA per 1 ha for the current season is more than USD 300/ha.

Financial report of the company for 9m 2017 is to be issued on 16 November 2017.

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