MHP in Ukraine reduced production due to due to logistical issues when exporting.
Ukraine-based poultry company MHP SE saw its sales increase by 10% in the second quarter of the current financial year. This is despite an 11% year-on-year drop in chicken production in the domestic market, the company reported last month.
Chicken production for the three months was about 170,400 tons (mt), compared to about 191,000 tons for the same quarter in 2021. Meanwhile, revenues from Ukraine operations increased from $542 million to $595 million over the same period.
MHP was able to recapture some of the lost market through exports, as domestic poultry consumption was adversely affected by Ukraine’s remaining depopulation, declining incomes and logistical challenges. However, this was 68,552 mt, 23% below the previous year’s value. Exports accounted for 53% from 56% of total income from domestic operations.
The company’s exports from Ukraine last quarter he was estimated at $333 million. Compared to the same period in 2021, operating margin declined 72% to $67 million over the last three months. MHP reported an operating profit margin that fell to just 11%, compared to 44% in the second quarter of last year.
Meanwhile, net income for the quarter fell to just $20 million, down from $232 million for the same period in 2021. Operating margin (measured as adjusted earnings before interest, tax, depreciation and amortization; EBITDA) of 19% was significantly lower. Up from 51% reported a year ago.
Chicken broiler production fell by 2.4% to about 346,000 tons in the last six months, compared with more than 375,500 tons produced by MHP’s Ukrainian companies in the first half of fiscal year 2021. In the domestic market, MHP reported a 24% rise in the retail price of chicken to US$1.93 per kilo.
Exports were just under 157,900 tonnes, down 17% from the previous year.
In the same six months, European operations saw broiler production increase by just over 10% to over 59,800 tonnes. The average price is €3.11 (US$3.00) per kilo, up from €2.51 a year ago.
However, MHP of US$1.149 billion recorded a 16% year-over-year sales increase over the six months. The share of exports in total sales increased by 5 percentage points to 56%. The value of exports during the period was $640 million, an increase of 27% over the same period.
Despite adjusting those businesses to reflect the challenges posed by the Russian invasion since February, MHP reported a 70% decline in operating profit in the first half to $76 million. I’m here. Operating margin declined from 26% to 7%.
The company’s difficult times were exacerbated by unfavorable exchange rates. It reported a net half-year loss of $89 million in the most recent six months. This includes a foreign exchange loss of USD 92 million, compared to a foreign exchange gain of USD 51 million in the first half of 2021. Before currency translation differences, MHP reported his US$3 million net profit in the first half of 2021. The comparable figure for this period in 2021 was USD 182 million.
In July, MHP confirmed that sustainability remains a company priority despite ongoing business challenges.
Follow us on LinkedIn, Twitter & Facebook.