MHP said that as a result of "challenging
conditions" it would likely miss its financial forecast this year as the
Ukrainian sunflowers-to-sausages group felt the impact of lower grain prices.
"Our financial results for 2013 will
be lower than initially projected," said Yuriy Kosyuk,
group chief executive.
For this year," the company's significant increase in
poultry and grain production will be insufficient to compensate for the timing
effects of fluctuating grain prices," reported Kosyuk
However, the lower grain prices are likely to have a positive
knock-on effect in 2014, when MHP will benefit from cheaper poultry feed costs.
"We expect this to be largely compensated next year as
lower prices of grain harvested in 2013 should have a favourable effect on
poultry costs since the end of 2013 and through 2014, which will increase
profitability in our poultry division," Mr Kosyuk said.
MHP has further expanded its poultry business over the
course of the year, particularly its Vinnytsia facility, which the groups said
was operating at full capacity.
Poultry meat sales across the first half of
2013 totalling 205,300 tonnes, an increase of 13% on the same period of 2012.
In addition to the implications
of cheaper grain prices chief executive Yuriy Kosyuk, was also optimistic about
the poultry division recent expansions into Europe.
"In July 2013, we received the final
approvals to be able to export poultry products to the EU."
MHP expects to make the first
deliveries before year end.
export opportunities provide strong drivers for the company's growth both in
poultry and grain growing operations and a sound platform for strong
operational and financial performance in 2014 and beyond," Mr Kosyuk said.
MHP's reported earnings before interest, tax, depreciation
and amortisation (ebitda) from its core pultry division decreased 16% to $193m
over the first half of the year, owing to higher poultry feed feed costs and
Chicken prices, in Ukraine hryvnia terms declined 5%
year-on-year to an average 16.26 per kilo.
MHP saw a 1% increase in the price of sunflower oil over the
half year period to $1,120 per tonne, sales of which totalled 111,160 tonnes.
The group continued with its expansion plans, building on
its existing 290,000 hectare landbank.
"In July we completed our first deal in
Russia, acquiring a 40,000 hectare grain growing company. We expect its first
results in 2014.We also increased our land bank by 35,000 hectares in Ukraine,"
Mr Kosyuk said.
MHP continues to see
crop yields above the national average, reporting a yield of 5.5 tonnes per
hectare for wheat and 3.2 tonnes per hectare for rape.
Group earnings over the half year were almost
half that same H1 period of 2012 at $90m, owing to lower ebitda,
higher depreciation and one-off transaction costs related to new eurobond
issued in April 2013. Revenues were little changed year-on-year at
MHP depositary receipts, a proxy for shares, were down 0.8%
in lunchtime trading at $14.98.
The receipt had been as high as $18.65 at the start
of the month