OREANDA-NEWS. 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, today announces its pre-close trading update for Q4 2013 and the full year ended 31 December 2013.

Poultry and Poultry Related Operations

Vinnytsia - expansion project

During 2013 MHP's green field Vinnytsia project has been gradually launched in operations in line with operational and investment plans. By the end of 2013, nine of the 12 brigades at our new Vinnytsia complex were operational and working at 100% capacity. MHP's production volume as well as sales volume increased significantly year-on-year.

As the Vinnytsia Poultry complex (Phase 1) will continue launch of the final rearing sites as a logical step in an increase of production volumes and reach its full capacity since H2 2014, during 2014 the Company will increase its overall poultry production volume by more than 15% year-on-year.

Sales

Owing to the increasing production volumes at the Vinnytsia poultry farm, poultry production volumes in Q4 2013 increased by 15% to 125,820 tonnes (Q4 2012: 109,210 tonnes) and in 2013 increased by 17% to 472,800 tonnes (2012: 404,000 tonnes).

Poultry

Q4 2013

Q4 2012

% change

FY 2013

FY 2012

% change

Sales volume, third parties

tonnes

121,600

100,500

21%

447,000

375,300

19%

Price per 1 kg net VAT,

UAH

15.43

16.91

-9%

15.99

17.19

-7%

During the fourth quarter of 2013 the volume of chicken meat sales to third parties continued the growing dynamics of previous quarters and reached 121,600 tonnes, which is 21% higher than in Q4 2012 driven mostly by a new capacity launch in operations.

Export Sales: Export sales of chicken in Q4 2013 increased by 50% compared to Q4 2012 and constituted around 37,940 tonnes of chicken. For the total 2013 export of poultry increased significantly by more than 2 times compared to 2012 and constituted close to 123,000 tonnes of chicken meat, which is around 28% of total chicken sales volumes. Furthermore, following the Company's strategy of export diversification of its chicken meat export across all regions, MHP managed to significantly decrease its export share to the Custom Union countries since H2 2013.

In 2013 the Company opened over 20 new export sales markets both in Asia, Middle East and Africa, simultaneously increasing its exports trades across all regions.

In July 2013, MHP received permission (EU numbers) from the EU authorities for exports of poultry products to European countries for its three capacities: Myronivka poultry farm, Meat processing plant Legko (convenience food) and Snyatynska farm (goose meat and foie gras). Since October 2013, MHP has started to export its poultry products to the European market, which resulted in around 500 tonnes.

In 2014 MHP plans to increase its poultry export operations in the EU market.

Prices: In Q4 2013 the average price decreased to UAH 15.43 per kg (excluding VAT) compared to UAH 16.91 (excluding VAT) in Q4 2012 mainly owing to export sales increase.

In line with the Company forecast and expectations, the average price decreased by 7% year-on-year to UAH 15.99 per kg (excluding VAT) compared to UAH 17.19 in 2012 mainly due to significant increase of exports sales share from 15% in 2012 to 28% in 2013 as well as lower export price in H2 2013 as a result of new markets penetration and relatively stable domestic poultry prices during 2013.

Sunflower Oil Sales

Q4

Q4

%

FY

FY

%

Sunflower Oil

2013

2012

change

2013

2012

change

Sales volume, tonnes

64,820

47,900

35%

240,100

195,000

23%

Price per 1 per tonne, USD

861

1,136

-24%

1,033

1,109

-7%

In Q4 2013, 64,820 tonnes of sunflower oil were produced and sold for export at an average price of USD 861 per tonne, which is 24% lower than in Q4 2012 in line with world pricing trends.

In 2013 MHP sold 240,100 tonnes of sunflower oil, which is 23% more than in 2012 due to the increased production of fodder mill at the Vinnytsia Complex. All sunflower oil produced was sold to external customers at an average price of USD 1,033 per tonne, which is 7% lower than the average price of USD 1,109 in 2012 in line with international pricing trends.

All the income from export sales of sunflower oil and chicken meat is denominated in US dollars that hedge the currency risk of the Company. Revenue from sunflower oil and chicken export sales in 2013 grew by around 40% year-on-year.

Grain Growing Operations

At the end of 2013 MHP's total land bank constituted around 360,000 hectares of which 320,000 ha are in Ukraine and 40,000 ha in Russia. In 2013 the Company operated on 287,000 hectares of land in grain growing operations. Total harvest of MHP accounted around 2 million tonnes of grains and oilseeds in 2013, which is 23% higher than the harvest of 2012 as a result of an increase of land bank, favorable weather conditions and application of best agri technics.