REG - MHP SE - 2023 Integrated Annual Report and Press Statement
02/05/2024 07:30
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RNS Number : 9781M MHP SE 02 May 2024
02 May 2024, Limassol, Cyprus
MHP SE
Financial Results for the Fourth Quarter and Twelve Months ended 31 December
2023
MHP SE (LSE:MHPC), the parent company of a leading international
agro-industrial group with headquarters in Ukraine, today announces its
audited results for the fourth quarter and twelve months ended 31 December
2023. Hereinafter, MHP SE and its subsidiaries are referred to as "MHP", "The
Company" or "The Group".
MHP is reporting good operational and financial results for 12M 2023 thanks to
a recovery in export levels, continued strong demand, a stable price
environment and the MHP team's success in minimizing disruption to production.
It should be noted that operational and financial results in 12M 2022 were
more seriously affected by disruption in the early stages of the War, setting
a low bar for year-on-year comparison. Future results may again be adversely
affected by War-related challenges that are not under MHP's control.
MHP today also publishes its integrated Annual Report for 2023 (the period
ended 31 December 2023) as well as the Report in iXBRL. You can find the
Report following the link: https://mhp.com.ua/en/mhp-se/financial-reports
(https://mhp.com.ua/en/mhp-se/financial-reports)
WAR IN UKRAINE - UPDATE
Russia's War of attrition has entered its third year, a grim milestone. We
have seen significant offensives in southern and eastern territories and the
destruction of infrastructure and loss of life in all regions.
War continues to have a major impact on Company operations and our FY 2023
performance reflects the resilience and agility of our business model and the
tremendous efforts of our workforce. Irregular and frequent drone and rocket
attacks against civilian, energy and other infrastructure targets continue,
presenting us with a challenging and disruptive logistical environment,
driving additional other War-related costs. We have made provisions for
electricity outages and have alternatives ready to replace the supply from the
national energy network that remains under constant threat of bombardment.
At the date of publication, all our production facilities in Ukraine continue
to operate at close to full capacity and our own facilities have not suffered
significant physical damage. We can of course give no assurance that this will
remain the case and that our production facilities and the infrastructure that
we use will not become a target of new attacks. In the event of adverse
operational impacts, the Group responds immediately, ensuring it is ready to
take all actions necessary to rebuild, restore and restart production in the
shortest time possible.
Our operations in the Balkans, Perutnina Ptuj ("PP"), are not directly
affected by War as they are largely independent from an operational and supply
chain perspective.
We have incurred substantial War-related costs since the start of the
conflict. In 2023, these amounted to US$ 35 million (2022: US$ 69 million) and
included community support donations, the write-off of inventories and
biological assets, and other specific war-related expenses.
Our diversified export strategy, combined with our innovative and agile
approach to logistics, is driving our ability to maintain exports to over 70
countries within an unstable and volatile environment. We are navigating
significant disruption in several regions. Black Sea export routes continue
despite the unilateral withdrawal by Russia in July 2023 of the Black Sea
Grain Initiative (the "Grain Deal"); regular targeting of Ukrainian ports and
other transport-related infrastructure by Russian drones and rockets makes the
situation extremely volatile. In the Red Sea, the targeting of ships by Houthi
militia has increased transport costs internationally. Recurring strikes at
the Polish border together with similar problems at the borders in Hungary,
Romania and Slovakia continue to increase the costs of delivering poultry meat
to the EU with our fleet of trucks using alternative, longer routes. We have
swiftly changed the mode of transport or route when required, for example
diverting our fleet of trucks through other countries to counter the strikes.
We have changed our grain trading business model to rent and insure ships
directly, enabling us to better manage our risk profile.
CHANGE IN PRESENTATION OF SEGMENT INFORMATION
To accurately reflect the diverse nature of the Group's business operations
and improve disclosure, MHP has, since Q3 2023, implemented changes to its
presentation of business segment information, including:
the introduction of a new Vegetable Oil Operations Segment, which represents
production and sales of vegetable oil and related products. In 2022, these
activities were included in the Poultry and Related Operations Segment as
by-products of mixed fodder production for poultry;
the inclusion of meat processing and other meat (previously reported within
the Meat Processing and Other Agricultural Operations Segment) in the Poultry
and
Related Operations Segment, given that the meat processing and other meat
operations represent less than 10% of the Group`s revenue and have similar
characteristics to the poultry operations; and
combining grain-growing operations (presented as a separate segment in 2022)
and milk cattle farming (previously included within the Meat Processing and
Other Agricultural Operations Segment) into a revised reportable segment
called Agriculture Operations.
The corresponding segment information for the year ended 31 December 2022 has
been restated to ensure comparability. Overviews of each of the Business
Segments are provided below ahead of the respective Segment's financial and
operational results.
OPERATIONAL HIGHLIGHTS
Q4 2023
· Poultry meat production volume in Ukraine was down 5%
y/y to 172,275 tonnes (Q4 2022: 181,583 tonnes). Poultry meat production
volumes of the European Operating Segment (PP) remained stable at 31,075
tonnes (Q4 2022: 31,147 tonnes).
· MHP Ukraine's average poultry meat price increased by
4% to US$ 1.98 per kg (Q4 2022: US$ 1.90 per kg) excluding VAT. The average
price of poultry meat produced by PP was stable at EUR 3.49 per kg (Q4 2022:
EUR 3.47 per kg).
· Poultry meat exports from Ukraine decreased by 24% to
84,945 tonnes (Q4 2022 - 111,130 tonnes).
12M 2023
· Poultry meat production volume in Ukraine remained
stable y/y at 718,644 tonnes (12M 2022: 697,071 tonnes). Poultry meat
production volumes at PP increased by 6% y/y to 131,021 tonnes (12M 2022:
124,040 tonnes).
· MHP Ukraine's average poultry meat price was stable y/y
at US$ 1.95 per kg (12M 2022: US$ 1.95 per kg) excluding VAT. The average
price of poultry meat produced by PP increased by 6% y/y to EUR 3.54 per kg
(12M 2022: EUR 3.33 per kg).
· Poultry meat exports from Ukraine increased by 8% y/y
to 396,923 tonnes (12M 2022: 368,380 tonnes).
FINANCIAL HIGHLIGHTS
Q4 2023
· Revenue decreased by 5% y/y to US$ 727 million (Q4
2022: US$ 766 million).
· Export revenue of US$ 422 million, 58% of total revenue
(Q4 2022: US$ 491 million, 64% of total revenue).
· Operating profit of US$ 92 million increased by 16% y/y
and operating margin increased to 13% y/y (Q4 2022:US$ 79 million and 10%
respectively).
· Adjusted EBITDA (net of IFRS 16) remained stable y/y at
US$ 116 million (Q4 2022: US$ 109 million); adjusted EBITDA margin (net of
IFRS 16) also remained almost unchanged y/y at 16% (Q4 2022: 14%).
· Net profit decreased to US$ 20 million, compared to a
profit of US$ 38 million for Q4 2022.
12M 2023
· Revenue increased to US$ 3,021 million, up by 14% y/y
(12M 2022: US$ 2,642 million).
· Export revenue increased to US$ 1,807 million, up by
13% y/y, representing 60% of total revenue (12M 2022: US$ 1,601 million, 61%
of total revenue).
· Operating profit increased to US$ 339 million, up by
33% y/y (12M 2022: US$ 255 million) and operating margin remained almost
unchanged at 11% (12M 2022: 10%).
· Adjusted EBITDA (net of IFRS 16) increased by 16% y/y
to US$ 445 million (12M 2022: US$ 384 million); adjusted EBITDA margin (net of
IFRS 16) remained unchanged at 15%.
· Net profit of US$ 142 million (12M 2022: net loss of
US$ 231 million), primarily reflecting a US$ 40 million non-cash foreign
exchange loss in 12M 2023 compared with US$ 365 million in 12M 2022.
FINANCIAL OVERVIEW
(in mln. US$, unless indicated otherwise) Q4 2023 Q4 2022 % change(1)) 12M 2023 12M 2022 % change(1))
Revenue 727 766 -5% 3,021 2,642 14%
IAS 41 standard gain/(loss) 26 (9) 389% (48) (128) 63%
Gross profit 176 210 -16% 639 608 5%
Gross profit margin 24% 27% -3pps 21% 23% -2pps
War-related expenses (12) (24) -50% (35) (69) -49%
Operating profit 92 79 16% 339 255 33%
Operating profit margin 13% 10% 3pps 11% 10% 1pps
Adjusted EBITDA 141 138 2% 508 443 15%
Adjusted EBITDA margin 19% 18% 1pps 17% 17% 0pps
Adjusted EBITDA (net of IFRS 16) 116 109 6% 445 384 16%
Adjusted EBITDA margin (net of IFRS 16) 16% 14% 2pps 15% 15% 0pps
Net profit /(loss) 20 38 -47% 142 (231) 161%
Net profit/(loss) margin 3% 5% -2pps 5% -9% 14pps
(1)) pps - percentage points
Average official FX rate for Q4: UAH/US$ 36.59 in 2023 and UAH/US$ 36.57 in
2022.
Average official FX rate for 12M 2023 UAH/US$ 36.58 and for 12M 2022 UAH/US$
32.37.
DIAL-IN DETAILS
MHP's management will host a conference call for investors and analysts
followed by Q&A on the day of the results.
The dial-in details are:
Time: 13.00 London / 15.00
Kyiv / 08.00 New York
Title: Financial results
for Q3 2023 and 9M 2023
UK: +44 203 984 9844
Ukraine: +380 89 324 0624
USA: +1 718 866 4614
PIN code: 645982
To follow the presentation with the management team, please use the following
link:
https://mm.closir.com/slides?id=645982
(https://mm.closir.com/slides?id=645982)
For Investor Relations enquiries, please contact:
Anastasia Sobotiuk (Kyiv) +38 050 339 29 99
+357 99 76 71 26
a.sobotyuk@mhp.com.ua (mailto:a.sobotyuk@mhp.com.ua)
Segment Performance
Poultry and processed meat and related operations
Poultry meat
(in tonnes, unless indicated otherwise) Q4 2023 Q4 2022 % change y/y²()) Q3 2023 % change q/q²()) 12M 2023 12M 2022 % change²())
Sales volume of poultry meat(1)) 156,779 184,313 -15% 177,613 -12% 691,981 658,053 5%
Export sales 84,945 111,130 -24% 99,813 -15% 396,923 368,380 8%
Domestic sales 71,834 73,183 -2% 77,800 -8% 295,058 289,673 2%
Portion of export sales, % 54% 60% -6pps 56% -2pps 57% 56% 1pps
Average price per 1 kg net of VAT, USD 1.98 1.90 4% 1.96 1% 1.95 1.95 0%
(¹)) Poultry meat consists of raw and unprocessed parts of chicken, meat
after minor processing, meat after grinding and chicken meat with the
addition of spices (marinated meat)
(¹)) pps - percentage points
The total volume of poultry meat sold to third parties in 12M 2023 increased
by 5% y/y to 691,981 tonnes (12M 2022: 658,053 tonnes) due to a significant
increase in export sales. Export sales in 12M 2023 increased by 8% y/y to
396,923 tonnes, mainly as a result of increased sales volume of chicken to the
EU and whole chicken in MENA region.
Processed poultry meat
(in tonnes, unless indicated otherwise) Q4 2023 Q4 2022(1)) % change y/y²()) Q3 2023 % change q/q²()) 12M 2023 12M 2022 % change²())
Sales volume of processed meat(1)) 10,368 10,006 4% 10,097 3% 37,628 36,969 2%
Export sales 2,277 1,726 32% 1,864 22% 6,102 4,464 37%
Domestic sales 8,091 8,280 -2% 8,233 -2% 31,526 32,505 -3%
Portion of export sales, % 22% 17% 5pps 18% 4pps 16% 12% 4pps
Average price per 1 kg net of VAT, USD 3.09 2.53 22% 3.01 3% 2.94 2.53 16%
(¹)) Processed meat consists of meat after significant processing (added
supplements like vegetables or breading), pre-cooked and ready-to-eat meat
²()) pps - percentage points
Export sales volume of processed poultry meat increased by 37% y/y to 6,102
tonnes in 12M 2023 compared to 4,464 tonnes in 12M 2022. The average price
increased by 16% y/y to USD$ 2.94 per kg in 12M 2023 (12M 2022: USD$ 2.53 per
kg) driven mainly by an increase in raw material prices (spices, packaging and
other components) as well as by a positive change in product mix.
Financial result and trends
(in mln. US$, unless indicated otherwise) Q4 2023 Q4 2022 % change y/y(1)) Q3 2023 % change q/q(1)) 12M 2023 12M 2022 % change(1))
Revenue 386 419 -8% 425 -9% 1,643 1,525 8%
- Poultry meat²()) 324 359 -10% 359 -10% 1,402 1,328 6%
- Processed meat 32 25 28% 30 7% 111 93 19%
- Complementary products and other sales 30 35 -14% 36 -17% 130 104 25%
IAS 41 standard gain (1) (11) 91% 2 -150% 15 13 15%
Gross profit 91 92 -1% 99 -8% 402 318 26%
Gross margin 24% 22% 2pps 23% 1pps 24% 21% 3pps
War-related expenses (5) (3) 67% (4) 25% (17) (38) -55%
Adjusted EBITDA 60 55 9% 83 -28% 321 204 57%
Adjusted EBITDA margin 16% 13% 3pps 20% -4pps 20% 13% 7pps
Adjusted EBITDA (net of IFRS 16) 59 53 11% 83 -29% 319 202 58%
Adjusted EBITDA margin (net of IFRS 16) 15% 13% 2pps 20% 19% 13% 6pps
-5pps
(1)) pps - percentage points
(²)) Revenue from poultry meat includes sales of offal, which doesn't include
in table regarding sales volume and prices of poultry meat
In 12M 2023, revenue increased by 8% y/y as a result of sales volume increase
of poultry meat and processed meat and an increase in average prices for
processed meat.
Gross profit in 12M 2023 increased to US$ 402 million mainly driven by higher
sales volumes of poultry meat on export markets and by increase of prices for
processed meat.
In 12M 2023, adjusted EBITDA (net of IFRS 16) increased to US$ 319 million,
mainly as a result of higher gross profit and lower War-related expenses.
Vegetable Oil Operations
Vegetable oil
(in tonnes, unless indicated otherwise) Q4 2023 Q4 2022 % change y/y Q3 2023 % change q/q 12M 2023 12M 2022 % change
Sales volume of sunflower oil 94,166 95,895 -2% 126,882 -26% 466,926 272,807 71%
Sales volume of soybean oil 11,640 13,583 -14% 11,096 5% 50,766 40,845 24%
In 12M 2023 MHP's sales of sunflower oil increased by 71% y/y compared to 12M
2022 to 466,926 tonnes, mainly driven by an increase in production of
sunflower cake due to both additional crushing capacity and a change in the
recipe as well as partial restoration of logistic routes comparing to 12M
2022.
Sales of soybean oil amounted to 50,766 tonnes in 12M 2023 also increased by
24% y/y, compared with 40,845 tonnes in 12M 2022 due to disruption in
logistics in 2022.
Financial result and trends
(in mln. US$, except margin data) Q4 2023 Q4 2022 % change y/y(1)) Q3 2023 % change q/q(1)) 12M 2023 12M 2022 % change(1))
Revenue 114 148 -23% 147 -22% 606 464 31%
- Vegetable oil 102 142 -28% 137 -26% 565 448 26%
- Related products(2)) 12 6 100% 10 20% 41 16 156%
Gross profit 9 36 -75% 21 -57% 79 69 14%
Gross margin 8% 24% -16pps 15% -7pps 13% 15% -2pps
Adjusted EBITDA 10 37 -73% 23 -57% 82 71 15%
Adjusted EBITDA margin 9% 25% -16pps 16% -7pps 14% 15% -1pps
Adjusted EBITDA (net of IFRS 16) 9 37 -76% 23 -61% 80 71 13%
Adjusted EBITDA margin (net of IFRS 16) 8% 25% -17pps 16% -8pps 13% 15% -2pps
(1)) pps - percentage points;
(2)) Related products consist of meal, cake, husk.
The segment's revenue in 12M 2023 increased by 31% y/y to US$ 606 million that
resulted in higher adjusted EBITDA (net of IFRS 16) of US$ 80 million compared
to US$ 71 million in 12M 2022 driven by increase in sales volume of vegetable
oil.
Agriculture operations
In 2023 MHP harvested around 346,000 hectares of land in Ukraine and gathered
around 2.5 million tonnes of crops, 32% higher than in 2022, mainly due to
favorable weather condition during the harvesting season. MHP's average yields
remain well above the average for Ukraine for all crops due to operational
efficiency and employment of best practices.
Harvest results
2023 ( 1 ) 2022 ( 1 )
Production volume Cropped Production volume Cropped
land land
in tonnes in hectares in tonnes in hectares
Corn 1,346,620 135,516 1,088,476 151,850
Wheat 267,038 40,283 224,391 40,711
Sunflower 185,225 60,415 159,357 62,585
Rapeseed 122,544 33,065 104,849 27,520
Soya 185,375 58,832 109,240 44,953
Other ( 2 ) 451,162 18,656 248,334 13,129
Total 2,557,964 346,767 1,934,647 340,748
( 1 ) Only land of Grain Growing Segment;
( 2 ) Including barley, rye, sugar beet, sorghum and other and excluding
land left fallow as part of crop rotation.
Yields
2023 2022
MHP's Ukraine's average( 1 ) MHP's Ukraine's average( 1 )
average( 1 ) average( 1 )
tonnes per hectare tonnes per hectare
Corn 9.9 7.8 7.2 6.6
Wheat 6.6 4.8 5.5 4.1
Sunflower 3.1 2.4 2.5 2.2
Rapeseed 3.7 2.9 3.8 2.9
Soya 3.2 2.7 2.4 2.4
(1) MHP yields are net weight, Ukraine yields are bunker weight.)
Decrease of domestic grain prices and limited export capabilities as a result
of continuous rocket strikes on Ukrainian ports infrastructure and termination
of the Grain deal by Russia had a negative effect on segment performance.
However it should be noted that these events will have limited impact on the
overall Group performance, as almost all grains and oilseeds (except part of
rapeseeds and some wheat) are consumed internally.
Financial result and trends
(in mln. US$, unless indicated otherwise) 12M 2023 12M 2022 % change
Revenue 227 189 20%
IAS 41 standard loss (63) (143) 56%
Gross profit 26 108 -76%
War-related expenses (3) (6) -50%
Adjusted EBITDA 63 153 -59%
Adjusted EBITDA (net of IFRS 16) 6 99 -94%
Agriculture Operations Segment's revenue in 12M 2023 amounted to US$ 227
million compared to US$ 189 million in 12M 2022. The increase was mainly
attributable to the higher volume of grain sales due to higher yields.
A significant decrease in both domestic and international grain prices, as
well as increased logistic costs due to the War impact, led to poor results in
the Agriculture Operations Segment.
European Operating Segment (PP)
Poultry(1)) Q4 2023 Q4 2022 % change y/y Q3 2023 % change q/q 12M 2023 12M 2022 % change
Sales volume, third parties tonnes 20,229 18,546 9% 21,180 -4% 80,520 74,316 8%
Price per 1 kg net VAT, EUR 3.49 3.47 1% 3.55 -2% 3.54 3.33 6%
(¹)) Poultry meat consists of raw and unprocessed parts of chicken, meat
after minor processing, meat after grinding and chicken meat with the
addition of spices (marinated meat)
In 12M 2023, poultry meat sales of the European Operating Segment increased to
80,520 tonnes. This was driven by an increase in production volume of poultry
meat, both fresh and frozen. Average price increased by 6% in 12M 2023 to EUR
3.54 (12M 2022: EUR 3.33).
Processed meat(1)) Q4 2023 Q4 2022 % change y/y Q3 2023 % change q/q 12M 2023 12M 2022 % change
Sales volume, third parties tonnes 11,596 11,162 4% 12,946 -10% 46,555 43,277 8%
Price per 1 kg net VAT, EUR 3.36 3.19 5% 3.32 1% 3.33 3.09 8%
(1)) includes sausages and convenience foods
Meat processing product sales were up by 8% y/y to 46,555 tonnes in 12M 2023
(12M 2022: 43,277 tonnes) due to increase in production volume of sausages and
convenience products. Average price in 12M 2023 increased by 8% y/y to EUR
3.33.
Financial result and trends
(in mln. US$, except margin data) Q4 2023 Q4 2022 % change y/y(1)) Q3 2023 % change q/q(1)) 12M 2023 12M 2022 % change(1))
Revenue 134 118 14% 144 -7% 545 464 17%
IAS 41 standard gains 2 (2) -200% 2 0% - 2 -100%
Gross profit 26 23 13% 41 -37% 132 113 17%
Gross margin 19% 19% 0pps 28% -9pps 24% 24% 0pps
Adjusted EBITDA 25 7 257% 29 -14% 93 65 43%
Adjusted EBITDA margin 19% 6% 13pps 20% -1pps 17% 14% 3pps
Adjusted EBITDA (net of IFRS 16) 24 7 243% 28 -14% 91 63 44%
Adjusted EBITDA margin 18% 6% 12pps 19% -1pps 17% 14%
(net of IFRS 16) 3pps
(1)) pps - percentage points.
European Operating Segment's gross profit in 12M 2023 increased by 17% y/y to
US$ 132 million (12M 2022: US$ 113 million), due to decrease grain prices for
production purpose which have reduced level of cost.
Adjusted EBITDA (net of IFRS 16) amounted to US$ 91 million for 12M 2023
compared with US$ 63 million for 12M 2022 in line with gross profit. Adjusted
EBITDA margin (net of IFRS 16) increased to 17% from 14%.
Current Group cash flow
(in mln. US$) Q4 2023 Q4 2022 12M 2023 12M 2022
Cash from operations 62 101 377 478
Change in working capital (19) (93) 61 (340)
Net Cash from operating activities 43 8 438 138
Cash used in investing activities (73) (49) (228) (174)
Including:
CAPEX(1)) (54) (54) (212) (159)
Cash from financing activities 13 14 (86) 57
Total change in cash(2)) (17) (27) 124 21
(1))Calculated as cash used for Purchases of property, plant and equipment
plus cash used for purchases of other non-current assets
(2))Calculated as Net Cash from operating activities plus Cash used in
investing activities plus Cash used in financing activities
Cash flow from operations before changes in working capital for 12M 2023
declined to US$ 377 million (12M 2022: US$ 478 million), mainly as a result
of interest payments of US$ 178 million in 12M 2023 compared to US$ 126
million in 12M 2022.
The differences in working capital changes between 12M 2023 and Q4 2023
compared to 12M 2022 and Q4 2022 respectively were mainly attributable to:
· return of stocks of chicken meat and vegetable oil to normal
levels from the unusually high amounts in 2022, caused by disrupted logistics
due to War activities, that has partly recovered afterward due to the Grain
deal and diversification of delivery routes by the Group;
· lower investments in raw materials during 2023 (energy
supplies, fertilizers, plant protections materials, animal feed components)
comparing to 2022 due to relative stabilization of situation in Ukrainian
economy and lower risk of disruptions in supply;
· stable amounts of trade accounts receivable compared to
significant growth in sunflower oil and chicken meat receivables during 2022;
In 12M 2023 total CAPEX amounted to US$ 212 million mainly related to
maintenance and modernization projects, new products development of Ukrainian
operations and expansion of Perutnina Ptuj production facilities. The increase
from US$ 159 million in 12M 2022 is mainly due to higher investments in cost
optimization and culinary strategy projects as well as purchases of diesel
generators for mitigation of possible power outages impact.
Debt Structure and Liquidity
(in mln. US$) 31 December 2023 31 December 2022 30 September 2023
Total Debt(1) 2)) 1,537 1,537 1,547
LT Debt(1)) 1,141 1,507 1,025
ST Debt (1)) 499 182 604
Trade credit facilities(2)) (103) (152) (82)
Cash and bank deposits (436) (300) (446)
Net Debt(1)) 1,101 1,237 1,101
LTM Adjusted EBITDA(1)) 445 384 438
Net Debt / LTM Adjusted EBITDA(1)) 2.47 3.22 2.51
(1) ) Net of IFRS 16 adjustments: as if any lease that would have been
treated as an operating lease under IAS 17 as was in effect before the 1
January 2019, is treated as an operating lease for purposes of this
calculation. In accordance with covenants in MHP's bond and loan agreements,
these data exclude the effects of IFRS 16 on accounting for operating leases.
(2)) Indebtedness under trade credit facilities that is required to be
repaid within 12 months of drawdown should be excluded for purposes of this
calculation
As of 31 December 2023, MHP's cash and cash equivalents amounted to US$ 436
million, of which US$ 311 million was held by the Group's subsidiaries outside
Ukraine. Under the repatriation rules instituted by the National Bank of
Ukraine, the equivalent amounts of such cash and cash equivalents would need
to be repatriated to Ukraine within six months of recognition of foreign
currency proceeds from exports from Ukraine, which limits the Group's ability
to utilize such cash and cash equivalents for repayment of indebtedness. At
the same time, on November 10, 2023, the National Bank of Ukraine established
a maximum settlement period of 90 calendar days for repatriating cash
resulting from the export of a specified list of agricultural products.
The Net Debt / LTM adjusted EBITDA (net of IFRS 16) ratio was 2.47 as of 31
December 2023, well below the limit of 3.0 defined in the Eurobond agreement.
As of 31 December 2023, the share of long-term debt in the total outstanding
debt decreased to 74% as the first US$ 500 million Eurobond, which is due for
repayment in May 2024, is now classified as short-term.
Subsequent events
On 5 January 2024, MHP SE launched an invitation to the holders of its US$ 349
million 7.75% Guaranteed Notes due 10 May 2024 to tender for purchase for cash
any and all of the US$ 349 million aggregate principal amount of Notes
outstanding. On 22 January 2024, MHP SE accepted for purchase all validly
traded Notes in the amount of US$ 138 million with the aggregate principal
amount of Notes outstanding following completion of the Tender Offer US$ 211
million. On 23 January 2024, Noteholders who validly tendered their Notes were
paid the consideration of US$ 950 per US$ 1,000 principal amount of Notes
(with total consideration paid US$ 131 million) and, on the same date, Notes
in the amount of US$ 138 million were cancelled.
On 29 December 2023, the Group entered into an agreement to acquire 81% of
corporate rights in business engaged in poultry farming and meat processing
in Albania for an estimated consideration of EUR 16.8 million (equivalent of
US$ 18.1 million). Completion of this transaction is subject to approval by
relevant regulatory bodies.
On 15 April 2024, the Group entered into a share purchase agreement to acquire
100% of the corporate rights in business engaged in meat processing in Ukraine
for an estimated consideration of EUR 14.0 million (equivalent of US$ 15.1
million). Up to the date of authorization of these financial statements, the
Group made payment of EUR 3.5 million for 24.9% of respective corporate
rights. This transaction is expected to be completed by the end of the 2024
but remains subject to certain conditions, including approval by relevant
regulatory bodies.
OUTLOOK
The Company is not in a position to state any outlook with confidence due to
the continuous risks of operating in War conditions and with major facilities
in regions under assault by Russia. The heavy March and April bombings of
civilian infrastructure and energy facilities were a stark reminder that the
whole of the territory of Ukraine is under threat, and extensive military
operations are not confined to the front line.
MHP will continue to do our utmost as a team and as a business to remain
strong and agile, to push innovation ever further and to carry out our
business to the highest international standards. Crucial to maintaining food
security and stability in Ukraine, the Group will remain at the heart of our
communities and support our people and their families as their needs change
and the situation develops.
Notes to Editors:
About MHP
MHP SE is the parent company of a leading international food & agrotech
group with headquarters in Ukraine and also in the Balkans (Perutnina Ptuj
Group).
Ukraine: MHP has the greatest market share and the highest brand recognition
for its products. MHP owns and operates each of the key stages of chicken
production processes, from feed grains and fodder production to egg hatching
and grow out to processing, marketing, distribution and sales (including
through MHP's franchise outlets). Vertical integration reduces MHP's
dependence on suppliers and its exposure to increases in raw material prices.
In addition to cost efficiency, vertical integration also allows MHP to
maintain strict biosecurity and to control the quality of its inputs and the
resulting quality and consistency of its products through to the point of
sale. To support its sales, MHP maintains a distribution network consisting of
nine distribution and logistical centers, within major Ukrainian cities. MHP
uses its trucks for the distribution of its products, which Management
believes reduces overall transportation costs and delivery times.
MHP also has a leading grain cultivation business growing corn to support the
vertical integration of its chicken production and increasingly other grains,
such as wheat and rape, for sale to third parties. MHP leases agricultural
land located primarily in the highly fertile black soil regions of Ukraine.
The Balkans: Perutnina Ptuj is a leading poultry and meat-processing producer
in the Balkans, has production assets in four Balkan countries: Slovenia,
Croatia, Serbia, Bosnia and Herzegovina; owns distribution companies in
Austria, North Macedonia and Romania and supplies products to 15 countries in
Europe. Perutnina Ptuj is a vertically integrated company across all stages of
chicken meat production - feed, hatching eggs production and hatching,
breeding, slaughtering, sausages and further poultry processing production.
MHP trades on the London Stock Exchange under the ticker symbol MHPC since
2008.
Forward-Looking Statements
This press release might contain forward-looking statements that refer to
future events or forecast financial indicators for MHP SE. Such statements do
not guarantee that these are actions to be taken by MHP SE in the future, and
estimates can be inaccurate and uncertain. Actual final indicators and results
can considerably differ from those declared in any forward-looking statements.
MHP SE does not intend to change these statements to reflect actual results.
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