MHP releases plans for large-scale poultry production increase

CFO Victoria Kapelyushnaya said that within the next five years MHP will boost the volume of poultry production by more than 50% - to 900,000 tonnes (t).

“If today we produce 600,000t, then we clearly understand that in four to five years we will be producing 900,000t of poultry meat a year” - she said. “The other target is the increase of the company’s land bank to 450-500 thousand ha.”​

If the company’s level of production for 2015 hits 600,000t, this result will indicate production growth by 9.79%, or 53,500t compared to 2014. This year growth will be mostly provided by the Vinnytsia poultry farm, the largest poultry producing unit in Ukraine, as last year it reached full production capacity.

Also the preliminary information says that the company will invest US$150 – 170 million in the development of business within coming several years. The MHP’s expansion plans will be supported with the improvement of operation results of poultry giant, as in the first quarter of 2015, it reduced net loss by 8% year-on-year to US$292 million.

“In the first quarter of 2015 the company continued to grow and develop. We have already started construction of the new - both the parent and broiler units. We continue to build a plant for processing of soybeans. These capacities will deepen a vertically integrated business model and will make MHP more self-sufficient in incubation eggs and protein”,​ stated the MHP’s CEO Yuri Kosyuk.

He also added that the company has to invest in the new facilities for the production of breeding eggs, as last year it actually lost control over the poultry farm ‘Shahtrsky Nova’. The farm is located in Donetsk Oblast at the territory controlled by rebels, and has not been operating since last year. Previously, it provided 30% of breeding eggs for poultry meat farms of MHP.

As a part of its new strategy, the company has got rid of Russian assets, as according to the experts, given the current geopolitical situation its operation appeared to be quite risky. For instance, the management of the confectionery factory ‘Roshen’ of Ukraine President Petro Poroshenko in Lipetsk Oblast of Russia during last year several times complained on the pressure of the authorities.

According to official information, on June 8 MHP has signed a deal with Swedish company Agrokultura on the exchanging of grain producing assets. Thus, MHP exchanged its subsidiary LLC Voronezh Agro Holding in the Voronezh Oblast (owns 40,000 ha of land and capacity of 150,000t for grain storage) to the assets in the Lviv, Ternopil, Ivano-Frankivsk Oblasts of Ukraine (about 60,000 ha of land and capacity of 90,000t for grain storage).

“This is a swap deal, which is not involve any money transfers,”​ said the co-owner of Agrokultura Igor Hudyakov. In general, management of MHP believes that the company left behind the period of turbulence.

“Despite the difficult macroeconomic and political situation in Ukraine, I am sure that thanks to the vertically integrated business model, the current year will be stable for the company,”​ Yuri Kosyuk added.