Page 70 - UKRRptDec18

Revenue at Ukraine’s leading poultry meat producer and farmer MHP rose 17.1% y/y to $1.14bn in 9M18, while its EBITDA slid 2.4% y/y to $362mn , according to its interim results published on November 14. The company’s poultry segment EBITDA decreased 13.3% y/y to $234mn, while farming segment EBITDA rose 32.0% y/y to $128mn in 9M18. The meat processing segment contributed $14mn to 9M18 EBITDA, or 6.7% lower y/y. MHP didn’t receive any state subsidies in 9M18 (vs. $40.9mn received in 9M17), which caused net profit to plunge 43.6% y/y to $141.7mn in 9M18. The net profit plunge was also connected to “the one-off transaction costs related to the new Eurobond issued in April 2018,” the company said. MHP’s operating cash flow before working capital changes increased 6.3% y/y to $320.5mn, while net cash flow from operating activities decreased 2.4% y/y to $193.1mn in 9M18. MHP’s CapEx surged 2.35x to $216mn mostly due to the launch of the second phase of constructing the Vinnytsia Poultry Complex. Its net debt-to-LTM-EBITDA ratio was 2.60x in the end of 9M18, compared to 2.44x a year ago and 2.25x at the year’s start. Also, the company offered an update on its harvesting campaign. In 9M18, sunflower seed yield rose 6.7% y/y to 3.2 t/ha, soybean yield gained 38% y/y to 2.9 t/ha and the preliminary corn yield (from 90% of area harvested) jumped 40% y/y to 10.2 t/ha. In other news, MHP plans to invest €200mn in CapEx in the next five years in the Perutnina Ptuj poultry plant in Slovenia, according to the company’s press release published on November 13. MHP plans to complete its acquisition by the end of 2018. In the third quarter of 2018, MHP’s poultry segment EBITDA increased 3.9% q/q to $80mn, or a 20.0% y/y decline. The company’s net revenue increased 13.9% q/q to $442.4mn, rising 19.4% y/y. “The company’s EBITDA fell mainly due to the absence of government grants. Without these grants in 9M17, the company’s EBITDA would have improved 9.4% y/y in 9M18. The grants are likely to be awarded in 4Q, which may boost the company’s bottom line,” Andriy Perederey of Concorde Capital said in a note. “The high poultry sales and strong harvesting results, along with expectations for higher poultry prices in the fourth quarter, support our expectations for MHP’s poultry segment EBITDA being in the range of $320-330mn in 2018 (vs. $367mn in 2017) and the company’s total EBITDA being in the range of $470-480mn in 2018. We remain bullish on MHP stock and neutral on its Eurobonds.”
Ebitda of Ukrainian grain producer Industrial Milk Company (IMC) increased by 18.4% year-on-year to $50.6mn in January-October , according to the company's report published on November 16. IMC generated $81.4mn in net revenue in January-October (flat year-on-year). Its cash flow from operating activities before working capital decreased 26.4% y/y to $17.2mn during this period. The company’s working capital jumped 70.3% y/y to $10.3mn and its CapEx rose 10.0% y/y to $4.4mn. IMC’s total debt dropped 20.3% y/y to $48.9mn, and its net debt slid 18.8% y/y to $44.2mn. Its net debt-to-LTM Ebitda ratio was 0.94x as of end-October vs. 1.19x a year ago. Andriy Perederey at Kyiv-based brokerage Concorde Capital wrote in a note on November 19 that as usual, IMC’s main revenue driver was its key crop corn, which contributed 75% to total revenue vs. 74% a year ago. But corn sales volumes decreased 3.9% y/y to 370 tonnes at an average selling price of $164 per tonne (5.1% y/y growth). So the company’s only Ebitda driver was net gain from changes in fair value of biological assets and agricultural produce, which increased 19.8% y/y to $62.9mn and was based on expectations of high yields of corn and already harvested sunflower seeds, Perederey added. Also, the company has adhered to its strategy of reducing its debt, which is at a healthy level. "So we remain positive about IMC stock’s
70 UKRAINE Country Report December 2018 www.intellinews.com