OREANDA-NEWS. February 03, 2010. MHP S.A. (LSE: MHPC) (“MHP” or “The Company”), one of the leading agro-industrial companies in Ukraine, focusing on the production of poultry and the cultivation of grain, is pleased to announce its pre-close trading update for Q4 2009 and the full year ended 31 December 2009.

Poultry and Poultry Related Operations

In 2009, MHP’s poultry and poultry related operations segment performed strongly despite the challenging economic conditions in Ukraine. During the year the Company increased its monthly poultry production volumes and sales by almost 50% compared to the end of 2008 due to the launch of phase two of the Myronivka poultry farm, the Company’s new state-of-the-art production facility.

During the fourth quarter of 2009 the volume of chicken meat sales to third parties increased by 50.7% compared to the fourth quarter of 2008, reaching 80,000 tonnes. Full year volumes increased by 26.9% to 272,900 tonnes. The volume growth was primarily a result of the launch of phase two of the Myronivka poultry farm. All the Company’s existing poultry production facilities operated at their full production capacity during the year. During the fourth quarter of 2009, consumer demand for chicken remained high as consumers continued to substitute other meats with locally produced chicken. As a result, the Company was able to sell close to 100% of the chicken produced.

Average chicken meat sales prices to third parties through the fourth quarter of 2009 increased by 6.6% to 12.37 UAH per kg. of adjusted weight (excluding VAT) when compared to the fourth quarter of 2008. For the full year 2009 prices increased by 6.4% to 12.79 UAH per kg. against 2008.

Poultry production costs in Q4 2009 were higher in UAH compared to Q4 2008 due to the increase in the market price of corn, which the Company uses to calculate its costs. However, due to the Company’s 100% self sufficiency in corn and its high level of vertical integration, the higher corn prices in Q4 2009 will have a positive effect on the financial performance of the Company's Grain Growing segment.

Following the opening of MHP’s new sunflower crushing plant at its Katerynopilsky facility in Ukraine in September 2009, 140,400 tonnes of sunflower oil was produced in the full year 2009, compared to 93,900 tonnes in the full year 2008. All of the sunflower oil produced was sold to external customers at an average price of USD  717 per tonne (2008: USD  1,179).

In Q4 2009, 49,000 tonnes were produced and sold at an average price of USD  758 per tonne (Q4 2008: USD 870). The opening of the new sunflower crushing plant enabled MHP to produce 50% more sunflower oil in Q4 2009 compared to Q3 2009.

Grain Cultivation and Storage

MHP produced a good harvest in 2009 with the yields of crops per hectare significantly higher than Ukraine’s average, which overall produced a high yield of crops.

 

2009 MHP’s average

2009   Ukraine’s average

2008    MHP’s average

2008   Ukraine’s average

(tonnes  per hectare)

(tonnes        per hectare)

(tonnes     per hectare)

(tonnes        per hectare)

Rapeseed

2.7

1.9*

3.5

1.8*

Wheat

5.8

3.1*

6.3

3.8*

Sunflower

3.3

1.5*

2.8

1.5*

Corn

9.0

5.0*

7.0

4.2*

* - Source: the State Committee on Statistics of Ukraine.

The Company used forward export contracts for the sale of rapeseed and approximately 50% of its wheat. MHP’s export grain sales are an additional source of foreign currency income accounting in 2009 for USD  30 million.

Due to the strong performance of the Grain Growing segment, management decided to increase MHP’s land bank.

Other Agricultural Operations

For the full year 2009, sausage and cooked meat production volumes increased by 53.8% to 24,600 tonnes compared to 16,000 tonnes in 2008. Q4 2009 sausage and cooked meat production volumes increased by 20.8% to 6,400 tonnes compared to 5,300 tonnes during Q4 2008.

Average sausage and cooked meat prices during 2009 decreased by 5.0% to 17.33 UAH per kg excluding VAT (FY 2008: 18.23 UAH per kg.) in line with consumer demand and the Company’s strategy of shifting its product portfolio towards mass market products. The average price in Q4 2009 remained at the same level as in Q4 2008. MHP is a market leader in meat processing in Ukraine and management expects further increases in its market share.

The financial results for Q4 2009 and full year 2009 will be announced in April, 2010. The Company will provide the exact date of publication and conference call details in due course.