MHP S.A., one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, has announced its pre-close trading update for the fourth quarter (Q4) 2013 and the full year ended 31 December 2013.

Poultry Operations

Vinnytsia–expansion project

During 2013, MHP’s green field Vinnytsia project has been gradually launched in operations in line with operational and investment plans. By the end of 2013, nine of the 12 brigades at our new Vinnytsia complex were operational and working at 100 per cent capacity. MHP’s production volume as well as sales volume increased significantly year-on-year.

As the Vinnytsia Poultry complex (Phase 1) will continue launch of the final rearing sites as a logical step in an increase of production volumes and reach its full capacity in the second half (H2) of 2014, the Company will increase its overall poultry production volume in 2014 by more than 15 per cent year-on-year.

Sales

Owing to the increasing production volumes at the Vinnytsia poultry farm, poultry production volumes in Q4 2013 increased by 15 per cent to 125,820 tonnes (Q4 2012: 109,210 tonnes) and in 2013, increased by 17 per cent to 472,800 tonnes (2012: 404,000 tonnes).

During the fourth quarter of 2013, the volume of chicken meat sales to third parties continued the growing dynamics of previous quarters and reached 121,600 tonnes, which is 21 per cent higher than in Q4 2012 driven mostly by a new capacity launch in operations.

Export Sales

Export sales of chicken in Q4 2013 increased by 50 per cent compared to Q4 2012 and constituted around 37,940 tonnes of chicken. For the total 2013, exports of poultry more than doubled from 2012 and constituted close to 123,000 tonnes of chicken meat, which is around 28 per cent of total chicken sales volumes.

Furthermore, following the Company’s strategy of export diversification of its chicken meat export across all regions, MHP managed to significantly decrease its export share to the Custom Union countries since H2 2013.

In 2013, the Company opened over 20 new export sales markets both in Asia, Middle East and Africa, simultaneously increasing its exports trades across all regions.

In July 2013, MHP received permission (“EU numbers”) from the EU authorities for exports of poultry products to European countries for its three capacities: Myronivka poultry farm, Legko meat processing plant (convenience foods) and Snyatynska farm (goose meat and foie gras).

Since October 2013, MHP has started to export its poultry products to the European market, which resulted in around 500 tonnes. In 2014, MHP plans to increase its poultry export operations in the EU market.

Prices

In Q4 2013, the average price decreased to UAH15.43 per kg compared to UAH16.91 in Q4 2012, mainly owing to export sales increase.

In line with the Company forecast and expectations, the average price decreased by seven per cent year-on-year to UAH15.99 per kg compared to UAH 17.19 in 2012, mainly due to significant increase of exports sales share from 15 per cent in 2012 to 28 per cent in 2013 as well as lower export price in H2 2013 resulting from new markets penetration and relatively stable domestic poultry prices during 2013.

All prices quoted are exclusive of Value Added Tax (VAT).