Ukraine poultry processor invests in more land
The move was in line with the company’s development strategy, said MHP’s CEO Yuriy Kosyuk during the Kyiv International Economic Forum ‘Ukraine: From Third World to First’.
“We have not stopped investing and are continuing to put money into our project in the Vinnitsa Oblast,” said Kosyuk, adding that MHP was also looking to acquire some assets abroad. “We will expand the company’s land holdings and I think we will also buy a few more companies this year - from among those that are undergoing severe difficulties.”
Growing poultry stock
The expansion of the company’s land mass is primarily intended to cover its demand for feed grains, which is forecast to grow nearly twofold within the next few years, as MHP starts construction on the second stage of its Vinnytsia poultry farm.
According to the head of the Vinnytsia poultry farm Alexander Gurov, the project would double the capacity of the farm from its current level of 220,000 tonnes (t) to 440,000t. The first stage of the complex reached full capacity in 2014, while the second stage of construction, launched in the first half of this year, should be completed in 2021.
“At the moment, there are 12 operating production sites, which rear 24 million birds during a two-month period,” said Gurov. “In future we aim to have 24 sites rearing 48 million birds during the same time frame. This, in turn, will increase the volume of processed meat and finished meat products.”
MHP’s management has also stated that the new facility will be located in an area covering 600-700 ha near the existing production sites. However, the amount of investment needed for the second stage of the project is hard to estimate due to fluctuations in Ukraine’s domestic currency in recent years.
“Many elements of the project are tied to [foreign] currency,” added Gurov. “The first phase cost the company more than UAH5.5 billion (US$750m, based on the 2013 exchange rate),” added Gurov.
Worst times over
MHP’s investment activity is being supported by an improvement in its financial results this year, following the serious problems it faced in 2014. According to an official report the company saw from net losses of US$61.2m during the first half of 2015 compared with a US$270m loss in the same period in 2014. Also during the first half of 2015, the company increased production capacity by 4% to 278,430t compared to the same period in 2014.
Last year the company faced the loss of its Shahterskaya poultry farm in the Donetsk Oblast, due to armed conflict in the region. As a result MHP faced a deficit in hatching eggs and had to switch to imports from abroad.
According to Kosyuk the company is now actively working to resolve this problem, and expects that new capacity will enable the company to abandon imports of hatching eggs in 2016.
MHP also hopes to improve its situation by developing exports, which have become more attractive following the devaluation of the country’s currency – the hryvnia. The Vinnytsia poultry farm now has permission to export poultry to 64 countries around the world. According to official information, the farm supplies 60-70% of all its poultry - or about 13,000-14,000t per month - to export markets.
