OREANDA-NEWS. May 20, 2010. MHP <MHPC LI BUY>, a major poultry meat producer in Ukraine, reported its 1Q2010 financial performance. The revenue jumped 48% from USD 135mn in 1Q2009 to USD 200mn in 1Q2010 following the launch of the second stage of Myronivka poultry farm. In q/q terms, the revenue remained mostly flat (-4% compared to USD 209mn in 4Q2009), with the differential resulting from the seasonal reduction in the amount of grain sold to external customers. Correspondingly, the Company’s costs have increased from USD 93mn in 1Q2009 to USD 150mn in 1Q2010, outpacing the growth in revenue by some 13% (61% growth y/y). Furthermore, the EBITDA of the group was flat at USD 49mn (the EBITDA margin actually decreased from 37% in 1Q2009 to 25% in 1Q2010). The resulting net income stood at USD 36mn.

Millennium Capitals view the news as neutral for the company, since its performance generally matched the results of 4Q2009. The differential in its margins is mainly due to the non-cash changes in the fair value of the biological assets and smaller government grants because of the lower grain sales that contributed greatly in 4Q2009. Compared to the 1Q2009, the higher input costs of the poultry segment in 1Q2010 have been caused by the higher price of corn feed that increased twofold y/y. Ultimately, Millennium Capital expects the gross margin in the poultry segment to get slightly above the current level as soon as the company accumulates the parent flock for the second stage of the Myronivka poultry farm and stops importing hatching eggs.