17th Oct 2011 07:00
PRESS RELEASE
October 17, 2011, Kyiv, Ukraine
MHP S.A.Pre-close trading update for the third quarter and nine months of 2011
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 third quarter and nine months ended 30 September 2011.
Poultry and Poultry Related Operations
Poultry | Q3 2011 | Q3 2010 | % change | 9M 20111 | 9M 2010 | % change | |
Sales volume, third parties tonnes | 99,900 | 81,000 | 23% | 282,000 | 249,500 | 13% | |
Price per 1 kg net VAT, UAH | 16.11 | 14.05 | 15% | 14.39 | 13.43 | 7% |
During the third quarter of 2011, the volume of chicken meat sales to external consumers increased by 23% to 99,900 tonnes compared to the third quarter of 2010, and by 13% to 282,000 tonnes during the first nine months of 2011 mainly as a result of the production increase due to more effective use of existing capacity as well as due to decrease in stocks.
Domestic demand for chicken meat during the first nine months of 2011 remained high and the Company was able to sell close to 100% of the chicken produced. Export sales for the first nine months of 2011 increased by almost 2 times compared to the same period last year.
The average chicken meat price through the third quarter of 2011 increased by 15% to UAH 16.11 per kg of adjusted weight (excluding VAT) when compared to the third quarter of 2010 that is in line with world poultry price trends and which is a procrastinated growth as a consequence of the grain price increase (majority of the production costs) in Ukraine and worldwide at end 2010. Through the nine months of 2011 average chicken prices increased by 7% to UAH 14.39 per kg (9M 2010: UAH 13.43 per kg) as prices were almost flat in the first half of 2011. In Q3 2011, 40,900 tones of sunflower oil were sold mainly for export at an average price of US$ 1,284 per tone, which was an increase of 49% on Q3 2010 (US$ 862 per tone). For the nine months of 2011, 125,400 tones of sunflower oil were sold at an average price of US$ 1,297 per tone, which was an increase of 54% on 9M 2010 (US$ 841 per tone).
Grain Growing Operations
Currently the Company cultivates approximately 280,000 hectares of land under control (total land bank in 2010 was 180,000 hectares) and this year is to harvest an additional 100,000 hectares in its grain growing segment.
2011 | 2010* (for land under control as of 01.01.2010) | ||||||
Production, tones | Cropped hectares* | Production, tonnes | Cropped hectares* | ||||
Corn | In process | In process | 492,642 | 63,165 | |||
Wheat | 267,250 | 52,210 | 183,785 | 39,360 | |||
Sunflower | 73,530 | 27,000 | 65,455 | 25,630 | |||
Rapeseed | 25,400 | 9,150 | 9,010 | 3,020 | |||
Other** | In process | In process | 162,166 | 15,442 | |||
Total: | n/a | n/a | 960,480 | 146,617 | |||
* - Actual hectares under crop and excluding land left fallow as part of crop rotation
** - Includes soybean, barley and sugar beet
The Company's harvest is on track. The Company forecasts strong harvest and yields for corn, taking into account current crop conditions. In general, MHP's yields are significantly higher than Ukraine's average and compared to yields in 2010.
2011 | 2010* (for land under control as of 01.01.2010) | ||||||
MHP's average* | Ukraine's average* | MHP's average* | Ukraine's average* | ||||
Corn | In process | In process | 7.8 | 4.3 | |||
Wheat | 5.1 | 3.4 | 4.7 | 2.9 | |||
Sunflower | 2.8 | 1.9 | 2.6 | 1.6 | |||
Rapeseed | 2.8 | 1.7 | 3.0 | 1.7 | |||
* - Tonnes per hectare
The Company has now completed its wheat, rapeseed, and sunflower harvests.
From land was under Company's control as of 01.01.2011 about 52,200 hectares (2010: 39,360 hectares) of land cropped with wheat 267,250 tones (2010: 183,785 tones) were harvested. Wheat net yields averaged 5.1 tones per hectare (2010: 4.7 tones per hectare) compared to Ukraine's average of 3.4 (2010: 2.9 tones per hectare) tonnes per hectare (Source: Committee of Statistics).
From 9,150 hectares (2010: 3,020 hectares) of land cropped with rapeseed, 25,400 tones (2010: 9,000 tones) were harvested. Rapeseed net yields averaged 2.8 tones per hectare (2010: 3.0 tones per hectare) compared to Ukraine's average of 1.7 (2010: 1.7 tones per hectare) tones per hectare (Source: Committee of Statistics).
As of today the Company has completed its sunflower harvest. From 27,000 hectares (2010: 25,630 hectares) of land cropped, 73,530 tones (2010: 65,455 tones) were harvested. Sunflower yields averaged 2.8 tones per hectare (2010: 2.6 tones per hectare) compared to Ukraine's average of 1.9 tones per hectare (Source: Committee of Statistics). The Company will use its entire sunflower yield to produce protein for fodder and sunflower oil will be exported.
The Company's corn harvest is ongoing and as of today it is 30% complete. The current net yield is averaging about 9.5 tones per hectare (2010: 7.8 tones per hectare) compared to Ukraine's average of 5.5 tones per hectare (Source: Committee of Statistics).
Other Agricultural Operations
Meat processing products | Q3 2011 | Q3 2010 | % change | 9M 2011 | 9M 2010 | % change | |
Sales volume, third parties tonnes | 10,900 | 9,900 | 10% | 28,200 | 24,100 | 17% | |
Price per 1 kg net VAT, UAH | 20.60 | 17.57 | 17% | 19.57 | 17.26 | 13% |
Through the first nine months of 2011 the Company continued to execute its strategy of growing its local meat processing market share. During the third quarter of 2011, sausage and cooked meat production volumes increased by 10% to 10,900 tones compared to 9,900 tones during the third quarter of 2010. During the first nine months of 2011 volumes increased by 17% to 28,200 tonnes (9M 2010: 24,100 tonnes).
Average sausage and cooked meat prices during the third quarter of 2011 increased by 17% to UAH 20.60 per kg. excluding VAT (Q3 2010: UAH 17.57) and through the first nine months of 2011 increased by 13% to UAH 19.57 per kg. excluding VAT (9M 2010: UAH 17.26 per kg).
MHP is a market leader in meat processing in Ukraine and management expects the Company's market share to increase further. More than 50% of the raw materials required by the Company's meat processing operations are internally produced chicken meat.
Vinnytsia - expansion project
MHP's new green field Vinnytsia project is being constructed to schedule and in line with the investment plans. To follow the progress on the site please visit: http://www.mhp.com.ua/en/node/1082/.
The financial results for the nine months of 2011 will be published on 17 November, 2011. 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:
For investor relations enquiries Anastasiia Sobotiuk (Kyiv)
For media enquiries Marc Cohen (London) Oleg Leonov (Moscow)
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Kyiv: +38 044 207 99 58
London: +44 20 7831 3113 Moscow: +7 495 795 06 23
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Notes to Editors:
About MHP
MHP is the leading producer of poultry products in Ukraine with the greatest market share and highest brand recognition for its products. MHP owns and operates 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 biosecurity and to control the quality of its inputs and the resulting quality and consistency of its products through to the point of sale. To support its sales, MHP maintains a distribution network consisting of 11 distribution and logistical centers, within major Ukrainian cities. MHP uses its trucks for the distribution of its products, which Management believes reduces overall transportation costs and delivery times.
MHP also has a leading grain cultivation business growing corn to support the vertical integration of its chicken production and increasingly other grains, such as wheat and rape, for sale to third parties. MHP leases agricultural land located primarily in the highly fertile black soil regions of Ukraine.
Since May 15, 2008, MHP has traded on the London Stock Exchange under the ticker symbol MHPC.
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Mhp Reg S