MHP EBITDA improves in poultry, drops in grain segment in 3Q13

Ukraine’s top poultry producer MHP (MHPC LI) reported on November 14 its results for the third quarter, in which its revenue rose 8% yoy to USD 422 mln. The key growth factor was its poultry segment, whose sales advanced 18% yoy to USD 328 mln, mainly due to 29% yoy growth in delivery of poultry meat. The segment’s EBITDA increased 4% yoy to USD 98 mln, while the company’s total EBITDA declined 17% yoy to USD 123 mln in 3Q13. The decrease was a result of an almost 3x yoy plunge in EBITDA of MHP’s grain segment to USD 23 mln in 3Q13. This decline, as well as 1.8x yoy growth in interest expenses, resulted in a 46% yoy drop in MHP’s bottom line for the quarter to USD 60 mln. In 9M13, MHP posted 3% yoy growth in revenue to USD 1,078 mln, while its EBITDA decreased 16% yoy to USD 317 mln (with both of its key segments contributing to the decline). Net profit dropped 47% yoy to USD 150 mln. The company also updated on its crop harvesting campaign, this time presenting resulting yields of sunflower (3.7 t/ha vs. 3.0 t/ha a year before), and up-to-date yields of corn (9.4 t/ha based on harvesting on 85% of planned area, vs. 7.6 t/ha in the previous season) and soybeans (2.4 t/ha from 95% of planned area, vs. 1.8 t/ha in the previous season).

Alexander Paraschiy: MHP’s 3Q results are encouraging, given that it was able to increase its cash-EBITDA (operating cash flow before working capital charges) by 9% yoy to USD 125 mln. The quarter’s weakened EBITDA is purely a result of weak prices in soft commodities this year, which made the company revalue its harvest downward. The strong results of its poultry segment are in line with our expectations. While we expect MHP’s cash EBITDA will fall USD 45-55 mln yoy this year, the firm will still generate much more free cash flow this year on significant CapEx declines (by USD 110 – 130 mln yoy) as the company has nearly completed its most ambitious investment project ever, its Vinnytsia chicken complex. The next year should be also very good for the company’s free cash flow with expectations for further CapEx declines, a likely further increase in the poultry segment’s profit on a scale effect, and a possible recovery in soft commodity prices that will enable MHP to generate better results in its grain segment.

Источник: Конкорд Капитал