August 29, 2014


EU to receive increased poultry supply from Ukraine's MHP


The EU is expected to witness a rising supply of poultry from Ukraine's poultry firm, MHP.


According to MHP representatives, the company is rapidly increasing volumes exported to the bloc. The EU will receive 10,000 - 12,000 tonnes of poultry meat by the end of 2014, based on MHP's forecast. The range represents almost a third of the total EU quota granted to Ukraine.


Currently, Ukraine has a quota of about 34,000 tonnes of duty-free poultry meat to the EU. In the next five years, this figure is expected rise to 40,000 tonnes yearly, with MHP accounting for more than 50% of the country's poultry production.


During the first half of 2014, MHP increased poultry production by 20% on-year, by up to 268,880 tonnes, while sales to third parties have risen 23% on-year to nearly 252,000 tonnes. Despite the ban on poultry imports into the Customs Union since February this year, export sales for the first six months have increased by 4% to 57,560 tonnes, due to market diversification.


Yuriy Melnyk, the chief executive of MHP, said that the company exported 900 tonnes of poultry meat in July 2014. "Every month, this figure is increasing… in the previous month, it was 700 tonnes and, before that, 600 tonnes.


Concerning the forecast for 2015, Melnyk explains that the volume of exports will depend largely on European importers. "Import conditions are determined by European companies, which receive a quota and, under the terms of that quota, make a financial pledge and sign a contract with us," he said.


However, the present drop in the Ukrainian currency has affected MHP's finances, resulting in losses during the first half of 2014. Based on statistics, MHP saw a net loss of US$270 million in January - June 2014, compared with US$90 million during the same period in 2013.


According to MHP's chief financial officer, Victoria Kapelyushnaya, the company bears the burden of a mounting debt which faces difficulties in payments due to the current economic situation.


"We cannot live outside the macroeconomic situation in the country, so at the end of the year, we will suffer a loss, and the main reason for this is the devaluation of the hryvnia," she said. "We (are) selling more and our factories are running at full capacity, but the results in the first half do not reflect the process associated with the closure of the Miner Nova poultry farm in the Donetsk Oblast region."


In addition, Russia's annexation of Crimea further complicates matters as MHP has assets in the peninsula.