Ukrainian poultry firm MHP is rapidly increasing the volume of poultry it supplies to markets in the European Union (EU), according to company representatives. By the end of the year, the company forecasts that it will send around 10,000t—12,000t of poultry meat to the EU, which is almost a third of the total EU quota granted to Ukraine.
Yuriy Melnyk, MHP chief executive, said that the company exported 900t of poultry meat in July 2014. “Every month this figure is increasing: in the previous month it was 700t and, before that, 600t. MHP could supply around 10,000t—12,000t of poultry meat to the EU by year-end,” he said.
Speaking about its forecast for the next year, Melnyk said the volume of exports will depend largely on European importers. “This is not down to us. 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 explained.
So far Ukraine has a quota of about 34,000t of duty-free imports of poultry meat to the EU. It is assumed that, in the next five years, this figure could rise to 40,000t per year. MHP accounts for more than 50% of the country’s poultry production and will probably enjoy the largest share of the import quotas.
However, at the same time, a fall in the value of Ukraine’s currency, hryvnia, has affected MHP’s finances, with losses in the first half of the year. According to the company’s statistics, in January-June 2014 it saw a net loss of US$270 million compared with a net profit of US$90m during the same period in 2013.
“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,” said MHP chief financial officer Victoria Kapelyushnaya.
According to her, the company has significant debt, which has been invested in recent development projects, but due to the economic situation, the debt is becoming increasingly difficult to repay.
“We sell more and more, our factories are running at full capacity, but the results in the first half do not yet reflect the process associated with the closure of the poultry farm Miner Nova in the Donetsk Oblast region,” said Kapelyushnaya. The farm was closed due to the ongoing armed conflict in that region.
Also, Russia’s annexation of Crimea has brought additional difficulties to the company, as MHP has a number of assets in the peninsula, which will now come under Russian jurisdiction.
In the first half of 2014, MHP increased poultry production by 20% year-on-year – up to 268,880t – with sales to third parties up 23% year-on-year to nearly 252,000t. Also despite the ban on imports of poultry into the Customs Union since February, export sales during the first six months rose by 4% to 57,560t, due to market diversification.