9th Jul 2008 07:00
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9 July 2008, London
MHP S.A. ("MHP" or the "Company")
MHP acquires 80% interest in Private Enterprise "Ukrainian Bacon"
MHP S.A. (LSE: MHPC), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, is pleased to announce today that it has acquired an 80% stake in Private Enterprise "Ukrainian Bacon", a private Ukrainian meat production company, for US $25 million. The majority of the purchase price has been paid to settle Ukrainian Bacon's existing liabilities.
Ukrainian Bacon, with operations facilities located in the Donetsk Region of Ukraine, produces sausages and cooked meats products under the brands Europroduct and Baschinsky. Ukrainian Bacon's current production capacity is approximately 50 tonnes of meat products per day and the daily production capacity is expected to reach 200-250 tonnes within next two to three years.
One of the components of MHP's strategy outlined at the time of the Initial Public Offering was to continue agro-industrial diversification through further development and expansion of its meat processing facilities. Following a review and evaluation of the Ukrainian meat market, MHP has decided to acquire this 80% stake in Ukrainian Bacon to increase its meat processing capacity, to increase the scale of its operations, to take advantage of Ukrainian Bacon's strong brands and to increase its market share.
Commenting on the acquisition, Yuriy Kosyuk, Chief Executive Officer of MHP, said:
"We are delighted to have successfully completed the acquisition of Ukrainian Bacon. The level of meat consumption in Ukraine remains below the average consumption level in developing countries and we believe that it will grow in line with the population's increasing income. Despite doubling our meat processing production volume since the start of the year, consumer demand still exceeds our production capacity. This acquisition will significantly increase our meat processing production capacity, whilst further strengthening our vertical integration model."
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Financial Dynamics Ben Foster (London) Marc Cohen (London) Leonid Solovyev (Moscow) |
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Notes to Editors:
About MHP
MHP was admitted to the Official List of the London Stock Exchange in May 2008. It is the leading producer of poultry products in Ukraine, with a 2007 market share for industrially produced chicken meat of approximately 36%, according to the State Committee on Statistics of Ukraine. It's "Nasha Ryaba" brand is the market leader, whilst MHP also has several other national and regional brands for processed meat products.
MHP is fully vertically integrated owning and operating each of the key stages of chicken production processes, from feed grains and fodder production to egg hatching and grow out to processing, marketing, distribution and sales (including through MHP's franchise outlets). Vertical integration reduces MHP's dependence on suppliers and its exposure to increases in raw material prices. In addition to cost efficiency, vertical integration also allows MHP to maintain strict bio-security and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale.
MHP also has an important and expanding grain operation, producing and selling sunflower oil as a by-product of its fodder production. MHP also produces and sells beef, sausages, cooked meats convenience food products, goose meat, foie gras, fruit and potatoes.
In 2007, MHP had revenues from continuing operations of US $478 million (2006 US $315 million) and EBITDA of US $164 million (2006 US $141 million). MHP has grown significantly in recent years. As at 31 December 2007, MHP's total assets were US $953 million as compared to assets of US $383 million as at 31 December 2005.
Information on Ukraine
Independent since 1991, Ukraine represents a large consumer market with 46 million people and a growing economy fuelled by the rising affluence of domestic consumers and external demand for Ukrainian products. In 2007, per capita GDP amounted to US $2,965 and the current pace of household income growth is expected to be sustained in 2008 owing to increasing salaries and enlarged social payments. Ukraine became a member of the WTO in June 2008.
Forward-Looking Statements
This press release might contain forward-looking statements that refer to future events or forecast financial indicators for MHP S.A. Such statements do not guarantee that these are actions to be taken by MHP S.A. in the future, and estimates can be inaccurate and uncertain. Actual final indicators and results can considerably differ from those declared in any forward-looking statements. MHP S.A. does not intend to change these statements to reflect actual results.
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