MHP increases EBITDA 1.4x yoy, decreases leverage in 9M14

Ukraine’s leading poultry meat producer MHP (MHPC LI, MHPSA) reported a 4% yoy decline in net revenue to USD 1,034 mln in 9M14, according to its Nov. 18 filing. Its EBITDA jumped 43% yoy to USD 453 mln in 9M14, fueled mainly by its strong performance in its flagship chicken segment. Government grants brought USD 68 mln in operating income (-7% yoy, contributing 15% to total EBITDA) and IAS-41 revaluation gains brought USD 81 mln (+172% yoy, contributing 18% to EBITDA) in 9M14.



MHP’s net income was negative at USD 302 mln, solely due to USD 561 mln in currency conversion losses. The company generated USD 262 mln in cash flow from operations in 9M14, which was just 1% better yoy. A radical cut in MHP’s CapEx program enabled it to halve investing cash outflow to USD 100 mln, which enabled MHP to pay dividends and slightly deleverage in 9M14. Its total debt decreased 5% YTD to USD 1,231 mln, and net debt fell 4% YTD to USD 1,080 mln. With its LTM EBITDA reaching USD 527 mln as of end-3Q14, it ratio of net debt-to-LTM EBITDA improved to 2.0x, down from 2.9x as of end-2013.



In its poultry and sunflower segment, MHP reported a 1% yoy decline in revenue to USD 889 mln in 9M14 (and +2% yoy in 3Q14). The decline was mostly prompted by devaluation of the local currency, in which it sold 74% of its chicken in 9M14. The company boosted output of its chicken meat 16% yoy to 403 kt in 9M14 (+9% yoy in 3Q14) and its deliveries 19% yoy to 387 kt in 9M14 (and +21% yoy in 3Q14). It increased export deliveries 20% yoy to 102 kt in 9M14 (and 49% yoy in 3Q14), despite a ban on selling its products to Russia since February.



Domestic sales of chicken increased 18% yoy in 9M14 and 11% yoy in 3Q14. Average prices of chicken meat increased 15% yoy to UAH 18.6/kg in 9M14, and 37% yoy to UAH 22.1/kg in 3Q14, still decreasing in USD terms, due to devaluation. Since the company benefited from smaller fodder costs, EBITDA in its chicken segment improved 51% yoy to USD 384 mln in 9M14 (and 49% yoy in 3Q14).



The company’s grain-growing segment traditionally contributed little to its top line in 9M14, bringing USD 48 mln in revenue (-19% yoy), while added much to its EBITDA (USD 85 mn, +37% yoy), mostly on revaluation gains. MHP is planning to collect about 2.0 mmt of crops this season in Ukraine, which is nearly flat yoy.



Alexander Paraschiy: The company’s EBITDA trend demonstrated in 9M14 is much better than we expected for full-year 2014 (+24% yoy), which is the result of better-than-anticipated IAS-41 gains. The company’s reduced net debt/EBITDA ratio is one of its most positive developments as it will enable smoothly taking credit lines from the IFC to repay USD 235 mln of its Eurobond maturing in March 2015. We also expect these results will be rewarded by the stock market, where MHP shares have fallen 32% over the last 12 months.

Источник: Конкорд Капитал