MHP chicken meat production grew 4% in Q1 2020

MHP’s overall production volumes of chicken meat in Q1 2020 increased by 4% and constituted 178.64 thou. t (Q1 2019: 171.27 thou. t), as a result of new rearing sites launched into operations during 2019 (Phase 2 (1 line) of the Vinnytsia Poultry Complex) as well as due to the increased share of heavier chicken production.

Due to the challenging/decreased exports (banned markets), the company notes, total sales of chicken meat to third parties in Q1 2020 decreased by 4% and constituted 157.73 thou. t of chicken meat compared to 164 thou. t in Q1 2019.

Domestic sales volumes increased by 7% year-on-year to 75.68 thou. t, driven by an increased share of frozen chicken (following the strategy to decrease stocks).

"Due to the sales restrictions (bans) imposed by the EU and MENA region countries governments predominantly, the company had to redirect its sales volumes to the countries, which remained open at the time. It became almost impossible to follow the strategy of market and product targeting. At the same time, MHP continued to follow its strategy of export sales diversification as much as it could," the report reads.

In Q1 2020, MHP’s exports of chicken meat constituted 82.05 thou. t, which is 12% lower than in the same period last year (Q1 2019: 93.05 thou. t), with significant decrease of countries in the export portfolio.

Export sales represented around 52% vs. 57% of total poultry sales volumes in Q1 2020 and Q1 2019, respectively.

The average chicken meat price in Q1 2019 constituted UAH 34.41 (USD 1.37) per kg, net of VAT, and decreased by 11% (3% in USD, respectively) compared to the same period last year, mainly driven by the dilution of profitability per kg affected by banned exports and increased sales of frozen chicken in Ukraine. However, at the same time, average poultry prices in Q1 2020 remained relatively stable compared to average poultry prices in Q4 2019 — UAH 34.69 (USD 1.43) per kg, net of VAT.

Previously reported that the Government of Ukraine is authorized to regulate the prices for socially important goods. The following products are subject to state regulation: buckwheat groats, sugar, wheat flour, domestic pasta, 2.5% milk, rye-wheat bread, category 1 chicken eggs, chicken carcase, 72.5% butter and still mineral water.