Myronivsky Hliboproduct agricultural holding (MHP) received a net loss of $133 million in 2020 versus a net profit of $215 million in 2019, mainly due to exchange rate losses of $204 million due to the annual depreciation of hryvnia by 16%, and the company’s revenue decreased by 7%, to $1.91 billion. According to the quarterly financial statements of the holding, released on London Stock Exchange on Wednesday, its adjusted EBITDA and operating income decreased by 7%, respectively, to $395 million and $201 million, while the profitability of sales (EBITDA margin) remained at the 2019 level of 21%.
The agricultural holding noted the impact of exchange rate losses in the amount of $204 million on the company’s financial indicators, saying that excluding exchange rate differences, the company’s net profit in 2020 would have been $71 million against $30 million in 2019.
MHP said that in 2020, export revenue decreased by 9.1%, to $1.015 billion, which is 53% of total revenue (56% of total revenue in 2019).
The agricultural holding said that the situation in export markets has deteriorated significantly due to several outbreaks of bird flu in early and late 2020 and the effect of coronavirus (COVID-19) pandemic throughout the year.
In the fourth quarter of 2020, MHP reduced its net loss by 60%, year-over-year, to $24 million, its total revenue decreased by 10%, to $497 million, and export revenue decreased by 19.3%, to $255 million (51% of total revenue).
MHP’s gross profit in the fourth quarter of 2020 increased by 44%, year-over-year, to $75 million, operating profit amounted to $7 million against an operating loss of $2 million, however EBITDA decreased by 10%, to $63 million.
Chief Executive Officer of the company Yuriy Kosyuk said in the statement that the company managed not only to adapt to the serious challenges of 2020, but also to become more resilient and take advantage of new opportunities. He said that as part of the strategic shift announced a year ago towards more customer-oriented products, including with additional processing and added value, for the domestic market of Ukraine and some export markets, the company launched a number of pilot projects for culinary transformation, including Meat Market convenience stores and DönerMarket houses.
“These offerings are at an early pilot stage and I look forward to updating you on progress in due course as this model is rolled-out more extensively over the next several years, transforming the group’s sales […] to a branded value-added base,” Kosyuk said.
According to the report, revenue for the company’s main chicken production segment in 2020 decreased by 5%, to $1.298 billion, and gross profit due to a decrease in meat prices by 30%, to $191 million, EBITDA by 31%, to $194 million. In the fourth quarter, sales in this segment decreased by 3%, to $328 million, while gross profit and EBITDA due to higher prices for cereals fell 66.7%, to $15 million and $14 million, respectively.
In the crop production segment, MHP’s revenue fell by half in 2020 due to a lower harvest, to $134 million, but due to price increases, gross profit increased 3.2 times to $94 million, and EBITDA by 38%, to $150 million.
In meat processing, sales over 2020 decreased by 3%, to $144 million, while gross profit and EBITDA remained at the same level of $19 million and $20 million, respectively. In the fourth quarter, revenue in this segment decreased by 10%, to $38 million, gross profit by 44%, to $5 million and EBITDA by 38%, to $5 million.
At the same time, the company managed to achieve significant improvement in the performance of Slovenian Perutnina Ptuj and its operations in Croatia and Serbia, which are reported as a European operating segment. Its revenue in 2020 increased by 24%, to $335 million, gross profit by 21%, to $93 million, EBITDA by 25%, to $55 million. In the fourth quarter, sales increased by 12%, to $87 million, gross profit by 5%, to $22 million, and EBITDA remained at $15 million.
In terms of other indicators, the company said that its capital investments in 2020 decreased by 30%, to $79 million, available cash from $341 million to $218 million, and net debt increased from $1.139 billion to $1.244 billion.
In its forecast, MHP said the prospects for the development of poultry farming in 2021 will be very difficult, given the ongoing COVID-19 crisis, weak economic conditions, high feed prices, a very active winter season for bird flu and global oversupply, however the company is confident in its business.
“Transformation to a culinary company: MHP is expanding its focus. The experience of global poultry producers supports MHP’s strategic shift to a culinary company. Moreover, we are transforming our relationship with retail, HoReCa and franchisees in order to reach more customers and meet their evolving needs by providing them with new safe and high quality products. Current challenges have led us to accelerate this strategic shift,” the company said in the report.
The company said that its continued vertical integration provides a significantly lower cost base compared to peers in the industry, as well as improved quality control and better biosecurity of poultry stock, and added that the demand for poultry meat is growing globally along with the decline in demand for red meat.
With regard to possible mergers and acquisitions (M&A), the agricultural holding indicates that it continues to monitor global developments and the potential for mergers and acquisitions. “MHP is well positioned to become an active participant in the ongoing consolidation of the industry,” the company said in the report.
MHP is the largest chicken producer in Ukraine. It is also engaged in the production of cereals, sunflower oil, meat products. MHP supplies the European market with chilled half-carcasses of chickens, which are processed, including at its factories in the Netherlands and Slovakia.
National bank of Ukraine’s official rates as of 26/03/21
Source: National Bank of Ukraine
Official rates of banking metals from national bank as of March 26
One troy ounce=31.10 grams
The European Investment Bank and Pravex Bank have signed a EUR30 million loan agreement to expand access to finance for small and medium-sized enterprises (SME) and mid-cap companies in Ukraine, a joint release said.
According to it, the loan is part of the efforts of the European Union initiative Team Europe to respond to the consequences of the coronavirus crisis.
“Cooperation with the EIB constitutes an important step in helping our bank reach its strategic goal to expand financing of small and medium enterprises, as well as mid-caps. This credit line will help us support our clients from the real economy, providing them with the affordable loans they need in order to mitigate the economic consequences of the pandemic crisis they have faced,” chairman of the management board of Pravex Bank Gianluca Corrias said.
Pravex Bank was founded in 1992. Its sole shareholder at the beginning of 2020 was Intesa Sanpaolo S.p.A. (Italy).
According to the National Bank, as of September 1, 2020, in terms of total assets (UAH 6.539 billion), Pravex Bank ranked 26th among 75 banks operating in the country.
Internal and external debt of Ukraine in 2009-2020.
SSC of Ukraine
During the Ukrainian-Moldovan political consultations, Deputy Foreign Minister of Ukraine Vasyl Bodnar and State Secretary of the Ministry of Foreign Affairs and European Integration of the Republic of Moldova Dumitru Sokolan discussed the status of implementation of the agreements reached during the visit of President of Moldova Maia Sandu to Kyiv in January 2021.
“The parties ‘synchronized watches’ regarding the nearest political contacts at the highest and high levels. Vasyl Bodnar informed about the preparations for the inaugural summit of the Crimean platform and the celebrations on the occasion of the 30th anniversary of the restoration of Ukraine’s independence on August 23-24,” the statement on the Ministry of Foreign Affairs website said on Thursday, March 25.
It is reported that considerable attention was paid to the implementation of cross-border infrastructure projects, primarily the construction of a bridge across the river Dniester in the area of Yampil-Koseuts settlements, the parties positively noted the progress in this case.
“Bodnar and Sokolan emphasized the importance of an early resumption of negotiations between the authorized authorities in order to resolve the entire range of issues related to the functioning of the Dniester hydroelectric complex, as well as to complete the process of demarcation of the Ukrainian-Moldovan border,” the Foreign Ministry said.
The parties checked their positions on expanding the legal framework between the two states in various fields.
A separate topic of the consultations was regional security issues, in particular the threats associated with the presence of Russian military units in the Transnistrian region of Moldova.
The Deputy Minister said that Ukraine is determined to continue supporting territorial integrity and sovereignty of Moldova within the internationally recognized borders, as well as to be an active participant in the negotiation process on the Transnistrian settlement.
“We regard the withdrawal of Russian troops from the territory of the Transnistrian region of Moldova as a matter of national and regional security,” the ministry’s press service quoted Bodnar as saying.
The parties discussed steps to strengthen bilateral trade and economic cooperation and implement energy projects.
In addition, it is reported that in context of humanitarian cooperation development, Bodnar asked to accelerate the ratification by the Moldovan side of the agreement signed on December 17, 2009 between Ukraine and the Republic of Moldova on cooperation in ensuring the rights of persons belonging to national minorities (Ukraine ratified it on October 5, 2010).
The parties discussed ways to deepen cooperation with the EU in context of implementation of the two countries’ course towards European integration. The diplomats also exchanged views on the efforts of the governments of Ukraine and Moldova to counter the spread of the COVID-19 epidemic.
