Business news from Ukraine


Myronivsky Hliboproduct (MHP) based on a preliminary estimate of results for the full year 2019, expects that earnings before interest, taxes, depreciation and amortization (EBITDA) is to be some 15% lower than the company’s previous guidance of $450 million provided in September 2019. According to a company report posted on the website of the London Stock Exchange (LSE) on Thursday, Three factors contributed to the weakening of profitability in the fourth quarter of 2019.
“[It is] strengthening of the Ukrainian hryvnia – as 54% of the company’s revenues are denominated in U.S. dollars, whereas most costs are incurred in UAH, the 13% strengthening of the UAH in Q4 2019 adversely impacted profits, primarily in grain growing operations (accentuated by the seasonality of operations with major expenses incurred in H1 2019),” the company said.
In addition, weak export prices – prices of chicken exports (mainly to the EU) and crops (especially corn) decreased substantially also affected the EBITDA decline. The third factor is the ban on exports to KSA – since September 2019, MHP has been banned from exporting poultry to Saudi Arabia, one of the company’s largest` export markets. MHP said that on 29 January 2020, KSA reopened its market to the import of Ukrainian poultry products (excluding products from the Vinnytsia region).
“Despite this, MHP ended the year with net debt at US$1,143 million and more than $300 million in cash. With no major debt facilities maturing until 2024, very limited short-term borrowings (around 2%) and a modest CAPEX program, it remains MHP’s policy to maintain robust cash reserves that are not materially affected by the weaker than expected financial performance,” MHP said.
The company said that the 2019 dividend is subject to the board of directors’ decision, however, taking into account the lower results, dividends are expected to be lower than last year.


Myronivsky Hliboproduct (MHP) in July-September 2019 received a net profit of $104.1 million, while in the same period in 2018 it saw a net loss of $48.8 million.
According to the holding’s quarterly financial statements posted on the London Stock Exchange, its revenue in the third quarter increased by 26.8%, to $559.8 million, and EBITDA by 10.1%, to $109 million.
MHP’s gross profit increased by 2.2%, to $93.9 million, while operating profit fell by 43.8%, to $39.8 million.
The agricultural holding explains the net profit figures with positive exchange rate differences in the reporting period in the amount of $109 million compared to a foreign exchange loss of $88 million in the third quarter of 2018.
MHP notes that over the indicated period, export revenue reached $317 million, which is 57% of total revenue (in the third quarter of 2018 some $223 million, 57% of total revenue).



Myronivsky Hliboproduct agricultural holding (MHP), whose majority shareholder and chairman of the board is Yuriy Kosiuk, has confirmed information about financing the Foundation for Support of Reforms in Ukraine by five of its enterprises, but the foundation independently decided on spending these funds, in particular on payment for the services of the U.S. lobbying company BGR in 2017-2018 for the National Reforms Council, led by the then President of Ukraine Petro Poroshenko.
“MHP companies really provided financial assistance to the Foundation for Support of Reforms in Ukraine. Financial assistance was provided to achieve the goal of the organization, namely to promote the development of Ukraine and the growth of well-being of its citizens by providing support in the development and implementation of reforms in Ukraine,” the press service of the holding told Interfax-Ukraine.
The agricultural holding said that MHP and its chairman did not used the funds provided to the Foundation for Support of Reforms to directly finance lobbying in the United States or other specific areas.
“The public organization independently determines the use of funds received from all founders and partners, taking into account the detailed directions of activity,” MHP noted.
According to the Kyiv Post edition, the administration of President Poroshenko through the Foundation for Support of Reforms in Ukraine paid for the services of American lobbyists at the expense of contributions made by Kosiuk, who at that time was a freelance adviser to the head of state, and it took $600,000 in 2017-2018. The matter concerns five agricultural firms: PrJSC Zernoproduct MHP, Vinnytsia Poultry Farm LLC, PrJSC Myronivska Poultry Farm, Research and Production Firm Urozhay LLC, and Urozhaina Kraina LLC. In addition to the money from Kosiuk, this public organization received grants of millions of dollars in support of reforms from embassies and Western donors, including American ones, Kyiv Post said.

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The Antimonopoly Committee of Ukraine opened a case against Myronivsky Hliboproduct (MHP), Committee Head Yuriy Terentyev has written on his Facebook page.
“The Antimonopoly Committee of Ukraine launched an investigation into the actions of the MHP group (five poultry farms and Private Joint-Stock Company Myronivsky Hliboproduct belonging to Yuriy Kosyuk) in the chicken market on the grounds of abusing monopoly position. The committee established that MHP sets conditions for trade partners for certain areas of sales, obliges partners to adhere to the pricing policy of the MHP group and prohibits them from selling competitors’ products. That is, MHP practices a restrictive trade policy towards distributors, sub-distributors and partners,” Terentyev wrote.
According to him, the actions of MHP can lead to a violation of the chicken distribution market structure, a significant restriction of the rights of other market players to freely choose their partners, as well as imposing their own rules of conduct on the market players.

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A project foreseeing the possible provision of EUR 100 million to Myronivsky Hliboproduct (MHP, Ukraine) agricultural company by the European Bank for Reconstruction and Development (EBRD) requires review, EBRD Senior Advisor on External Affairs Anton Usov has told Interfax-Ukraine.
“Some media reports that the EBRD allegedly rejected this project are not true. It was not even submitted to the board of directors for consideration,” he said on Thursday.
Usov said that the new date for its consideration by the bank’s directors will be announced additionally.
As reported, in January 2019, the EBRD said that in March 2019 its directors could consider the issue of providing EUR 100 million to MHP to acquire Slovenia’s Perutnina Ptuj.
In November 2018 MHP signed an agreement to acquire a 90.68% stake in Slovenia’s Perutnina Ptuj, a vertically integrated company in Southeastern Europe.

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Myronivsky Hliboproduct (MHP) plans to complete Phase 2 of the Vinnytsia poultry complex with a capacity of 260,000 tonnes by 2022.
According to an annual report of the company, MHP launched the first site of Phase 2 of the complex in 2018 with a capacity of 30,000 tonnes. The expansion of production would allow MHP to increase poultry production by 36%, to 840,000 tonnes from 618,000 tonnes.
According to the report, MHP also continues actively seeking opportunities for mergers and acquisitions of companies that produce or process poultry meat in the EU, the Middle East and North Africa.
According to the report, since 2018 the company is building the second and largest biogas complex with a capacity of 24 MW at the Vinnytsia poultry complex. The complex will reach its full capacity in two years. The launch of Phase 1 with a capacity of 12 MW is scheduled for the middle of 2019.
MHP also intends to increase the land bank to 500,000 hectares (by the end of 2018 it had 370,000 hectares) “over the medium term in order to further reduce the dependence on third-party suppliers of ingredients for fodder, and to provide additional hard currency revenues from grain export sales.”
According to the report, the capital investment of MHP in 2018 amounted to $232 million, mainly thanks to the launch of the production sites of Phase 2 of the Vinnytsia poultry complex. The planned volume of capital investments for 2018-2022 is $420 million.

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