15th Jul 2009 07:00
PRESS RELEASE
July 15, 2009, Kyiv, Ukraine
MHP S.A.Pre-close trading update for the first half of 2009
MHP S.A. (LSE: MHPC) ("MHP" or "The Company"), 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 its pre-close trading update for the second quarter and first six months of the year ending 30 June 2009.
Poultry and Poultry Related Operations
In accordance with previously announced plans, MHP successfully launched phase two of the Myronivka poultry farm in Q2 2009.
During the second quarter of 2009, the volume of chicken meat sales to external consumers increased by 20% to 65,800 tonnes when compared to the second quarter of 2008, and by 6% to 116,300 tonnes during the first six months of 2009. The increase was driven primarily by the launch of production at Myronivka phase two, which is expected to reach its full capacity in the second half of 2009. Demand for chicken meat during the first half of 2009 remained high as consumers continued to substitute other meats with locally produced chicken. As a result, the Company was able to sell close to 100% of the chicken produced.
The average chicken meat price through the second quarter of 2009 increased by 6.5% to 13.86 UAH per kg of adjusted weight (excluding VAT) when compared to second quarter of 2008, and through the first six months of 2009 it increased by 12.8% to 13.25 UAH per kg (H1 2008: 11.75 UAH per kg).
Despite the increase in utility prices, MHP's production costs per 1 kg of poultry meat during the first half of 2009 will be below the 2008 level in UAH due to the use of self-produced sunflower protein and corn in chicken fodder.
Grain Growing Operations
The Company currently has approximately 180,000 hectares of land under control including 155,000 hectares in the Grain Growing segment and an additional 25,000 in the Other Agricultural Operations segment.
The Company has just started harvesting and so is not able to provide an accurate forecast of the yields across all cultivated crops. However, based on the weather conditions and through continued use of modern farming techniques, management expects the yields to be significantly higher than Ukraine's average. MHP's current rapeseed yield averaged 2.8 tonnes per hectare compared to Ukraine's average 1.3 -1.4 tonnes per hectare (Centre "Agro Perspectiva" estimation).
The Company has concluded the forward export contract for the sale of 33,000 tonnes of rapeseed for the price of US $375 per tonne, excluding VAT and as of today has sold approximately 80% of its rapeseed yield. MHP's rapeseed sale is an additional source of foreign currency income.
Other Agricultural Operations
Throughout the first six months of 2009, sausage and cooked meat production volumes increased by 103% to 10,800 thousand tonnes compared to 5,300 thousand tonnes during the first six months of 2008. Q2 2009 sausage and cooked meat production volumes increased by 104% to 5,900 thousand tonnes compared to 2,900 thousand tonnes during Q2 2008. The substantial volume growth was due primarily to the acquisition of "Ukrainian Bacon" in July 2008.
Average sausage and cooked meat prices during the first six months of 2009 decreased by 12% to 17.45 UAH per kg excluding VAT (first six months of 2008: 19.80 UAH per kg) and in Q2 2009 average prices decreased by 18% from 21.20 UAH per kg excluding VAT in Q2 2008 to 17.45 UAH per kg excluding VAT. The decrease in average prices was due to "Ukrainian Bacon" producing sausage and cooked meat products in the mass segment, as well as the Company shifting its total product portfolio mix towards low price products in accordance with consumer demand.
Management is satisfied with the operating results for the fist six months of 2009, particularly the strong performance of the poultry business.
The financial results for the first six months of 2009 will be published on September 1, 2009. There will be a conference call for investors and analysts on the day that will take place at 4pm Kyiv time (2 pm London/5 pm Moscow). Dialing instructions for the call will be published in a due course.
For further information please contact:
|
Financial Dynamics Ben Foster (London) Marc Cohen (London) Leonid Solovyev (Moscow) |
London: +44 20 7831 3113 Moscow: +7 495 795 06 23 |
For investor relations enquiries:
|
MHP Anastasia Sobotyuk (Kyiv) ir@mhp.com.ua |
Kiev: +380 44 207 99 58 |
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 2008 market share for industrially produced chicken meat of approximately 39%, 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 and fruit.
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