Ukraine. MHP S.A. H1 pretax profit plunges to $93.4m
2013-08-30 10:42:54
MHP S.A.'s first-half pretax profit plunged to $93.4 million, from $173.4 million. Revenue was $655.8 million, from $654.5 million.
Higher cost of sales contributed to the fall in pretax profit, as did finance costs due to one-off transaction costs linked to a new Eurobond issued in April.
"This was a challenging period for the Company with correspondingly weaker financial results," said CEO Yuriy Kosyuk in a statement.
"Despite the challenging macroeconomic situation in Ukraine, during the first half of the year the Company significantly increased its capacity at each production site of our new Vinnytsia complex, enabling us to increase poultry exports in line with our strategy of export diversification," he said.
Operational highlights for the half year included:
Poultry and related operations
- During the first half of the year all the Company's chicken production facilities continued to operate at full capacity.
- The Company's share of industrially produced chicken in Ukraine in H1 2013 remained around 50%.
- The volume of chicken meat sales to external customers in H1 2013 year-on-year increased by 13% to 205,300 tonnes due to the increased production of chicken meat at the Vinnytsia poultry farm.
- In Q2 2013, chicken meat price (both domestic and export) remained stable compared to Q1 2013; however, the average chicken price decreased by 7% to UAH 16.20 per 1 kg of adjusted weight (excluding VAT) compared to Q2 2012. In H1 2013, average chicken meat price was UAH 16.26, 5% lower than in H1 2012. The decrease in average poultry prices is mostly related to the increased share of export in total poultry sales (as a result of lower price for frozen chicken compared to fresh).
- In H1 2013, 111,160 tonnes of sunflower oil were sold at an average price of US$ 1,120 per tonne; this was 17% higher in volume and 1% higher in price compared to H1 2012 due to the increased production of fodder and in line with world market price trends accordingly.
- During Q2 2013, the volume of exported chicken meat sales continued the growing dynamics of previous quarters, exploring new business opportunities in different business regions. This resulted in growth of export sales in H1 2013 by almost 3 times compared to the same period last year to 54,750 tonnes of frozen chicken meat.
Grain growing
- During the period the Company increased its land bank by 35,000 hectares in Ukraine. In July 2013, the Company acquired 40,000 hectares in Russia.
- In 2013 the Company expects to harvest around 290,000 hectares of land in grain growing operations.
- MHP's current yields of wheat (5.5 tonnes per hectare) and rape (3.2 tonnes per hectare), continue to be substantially higher than Ukraine's average.
Other agriculture
- Sausage and cooked meat production volumes decreased slightly from 16,510 tonnes in H1 2012 to 16,110 tonnes in H1 2013 due to the continuous product mix optimization.
- The Company's market share of Ukraine's sausage and cooked meat products in Ukraine remained stable at around 10%.