MHP SE. Unaudited Financial Results for the First Quarter ended 31 March 2020
02.06.2020 11:11 "Agro Perspectiva" (Kyiv) —
MHP SE, the parent company of a leading international agro-industrial group with headquarters in Ukraine, today announces its unaudited results for the first quarter ended 31 March 2020.
Hereinafter, MHP SE and its subsidiaries are referred to as «MHP», «The Company» or «The Group».
Despite the challenges posed by the global COVID-19 pandemic and an outbreak of H5N1 avian influenza in Ukraine, the Company delivered a robust performance in the first quarter of 2020.
Poultry production volumes reached 178,640 tonnes, up 4% (Q1 2019: 171,272 tonnes). Poultry production volumes of the European Operating Segment (PP) amounted to 23,858 tonnes (Q1 2019: 7,730 tonnes1)).
The average chicken meat price decreased by 3% to USD 1.37 per kg (Q1 2019: USD 1.41 per kg) (excluding VAT). The average price of chicken meat produced by PP during Q1 2020 was 2.56 EUR per kg (Q1 2019: 2.57 EUR per kg)
Chicken meat exports totaled 82,048 tonnes, a decrease of 12% from 93,045 tonnes in Q1 2019
An outbreak of H5N1 avian influenza in Ukraine (the Vinnytsia region) was announced at the end of January 2020. This caused a temporary cessation of exports from Ukraine to the EU, Saudi Arabia and other MENA markets, and the majority of CIS countries. Exports to the EU reopened at the beginning of March 2020 and Saudi Arabia/MENA markets reopened in February and March 2020, while the majority of CIS countries recommenced in May 2020. In order to mitigate the adverse impact on MHP’s operations and profitability, management decided to decrease capacity utilization of poultry production complexes by approximately 10% from February until the end of March 2020. Since the beginning of April, all of the Company’s poultry production facilities have been operating at full capacity again.
The impact of COVID-2019 on the Company in Q1 was not material and the Company largely continued to operate normally (apart from the avian influenza-related capacity reduction). As of the date of this report, the level of absenteeism of employees at MHP Groups enterprises is at the same level as last year. Management implemented a range of measures for preventing sickness and spread of infection within the company (including remote working, additional
medical screenings, corporate transfers and use of protective masks). At the Company’s production facilities, work was organised in shifts of smaller numbers of people to limit contact and minimise the potential spread of infection. In addition, a wait list of potential workers was accumulated, in case replacement of infected persons and those on quarantine would be required.
Revenue of US$ 443 million, an increase of 2% year-on-year (Q1 2018: US$ 436 million)
Export revenue of US$ 237 million, comprising 54% of total revenue (Q1 2018: US$ 268 million, 61% of total revenue)
Operating profit of US$ 47 million, decreased by 6% year-on-year; while operating margin was 11%
Adjusted EBITDA margin (net of IFRS 16) increased to 20% from 19%; adjusted EBITDA (net of IFRS 16) increased to US$ 90 million from US$ 83 million
Net loss of US$ 174 million, compared to profit of US$ 33 million for Q1 2019, primarily due to US$ 182 million of non-cash foreign exchange translation loss in Q1 2020, reflecting a % weakening in the Ukraine Hryvnia/US Dollar exchange rate in the quarter, compared to a gain of US$ 21 million in Q1 2019. Net profit before foreign exchange differences for Q1 2020 amounted to USD 8 million, 33% lower than USD 13 million for Q1 2019