MHP exports rise despite ‘low’ poultry prices
MHP, one of Ukraine’s foremost poultry processors, said volumes of poultry production increased by 11% (155,610 tonnes) year-on-year, when compared to figures from 2015. This, however, did little to stop the company’s pre-tax profits sliding by 25%.
The year-on-year slide has been largely attributed to a significant devaluation in the country’s currency, the Ukrainian Hryvnia (UAH), which dropped in January. As a result, gross profit for the three months to 31 March 2016 ended on $80,854 (UAH 2.04m), down from $107,539 (UAH2.7m) the year before.
“Despite the challenging situation in Ukraine, I am confident that we will continue to deliver healthy operational and financial results in 2016 and beyond,” commented MHP’s CEO Yuriy Kosyuk in the company’s trading report. The devaluation that led to MHP’s pre-tax profit fall is expected to be a “one-off”, the company said. This seems to be validated by the International Monetary Fund, which said in May it expects Ukraine’s overall GDP to grow by 1.5% this year.
Strong Middle East growth
Kosyuk also said MHP had continued to “perform strongly” in the first three months of the year, despite “historically low poultry prices worldwide”. In the face of a challenging international poultry market, MHP’s chicken exports increased by 23% to 31,970t, compared to 26,050t in the same period last year.
Exports have been helped by increased shipments of meat to the Middle East and North Africa (MENA), as previously reported by MHP in its operational results last month. Revenue generated from exports came to $115m (UAH2.9bn), around 47% of MHP’s total revenue for Q1.
Overall revenue increased by 1% to $244m (UAH 2.9bn).
With exports now amounting to nearly half of the company’s total revenue stream, MHP has recently opened a processing plant in the Netherlands. “This is a next logical step in deepening our vertical integration strategy, pursuing the main objective to have a tighter control over the quality of our products and services delivered to end customers,” said Kosyuk.
‘Optimistic’ outlook
The Netherlands processing facility is MHP’s first meat plant in EU territory and the investment to increase poultry exports to the EU cost $3.5m (UAH88m). It formed part of the company’s wider strategy for diversification in its export operation with sales to MENA and the EU rising by 74% and 38% respectively.
MHP has also launched new rearing sites in Ukraine and hopes to produce an extra 40,000t of meat than it did in 2015.
“With our competitive cost base, strong market position in Ukraine and growing presence in export markets, I am optimistic about the company and its prospects,” added Kosyuk.
