MHP SE

Ladies and gentlemen, thank you for standing by. I would like to welcome you to MHP's fourth quarter 2020 results call. At this time, all participant lines are in a listen-only mode. The format of the call will be a presentation by the MHP management and IR team, followed by a question and answer session. After the call, you will all have the opportunity to ask questions. If you are dialed in by the web, you may ask the questions using the voice or text feature. So, without further ado, I would like to pass the line to MHP. Anastasia, the floor is yours.

Thank you, Tim. Thank you. Good afternoon and good morning. Thank you for joining us today for MHP's conference call. My name is Anastasia Sabatyuk, Director of Investor Relations, and on the call today, we will discuss MHP's financial results for the fourth quarter and 12th month of 2022. Today's call is based on data and information released earlier today, Q4 and 12-month 2020 press release, and annual reports accordingly. However, during our call, we will discuss our projections and plans based on our assumptions and strategy. Please take it into consideration. Together with... Victoria Kapelushna, chief of MHP. We will present you the financial and operational results of the company in general and by segment. And after the presentation, we will be glad to answer your questions. So I think we are ready to start. Let's move on slide number four of your presentation. So first of all, let us look at the macroenvironment. we all know that the environment was very challenging during 2020. And I have to say that MHP successfully managed to go through all challenges of 2020 and contrary to industry fears in the world during and due to COVID-19 pandemic, we didn't stop our production. And apart from a two-month period in the first quarter when some export markets were closed due to avian influenza, continue to operate at full capacity as a result of a strong employee's commitment to the company and professional management team. When we look at the macro environment or environment in Ukraine, we can see the real GDP in 2020 fell by 4% after four years of growth. The government predicts the growth of the Ukrainian economy by 4.6% in 2021, taking into account positive trends in GDP since the second half of 2020. Meanwhile, Ukraine's annual inflation in Q4 2020 accelerated to 3.8% year-on-year, being at very low levels actually during 2020, as you can see on the diagram on this slide. This decrease was mainly driven by COVID-19 crisis as consumer demand for different products decreased significantly, and remained quite weak. During 2020, Ukrainian hryvnia devalued by around 16% year on year as a result of economic instability due to COVID-19 in the world. Let's get back to the company's results, and we go on slide number six of your presentation, key financials for the reporting period. So 2020 dealt us the perfect storm, a global pandemic, several outbreaks of avian influenza in Ukraine with adverse consequences, exit bans for MHP, and adverse weather conditions all sat against the backdrop of unprecedented global uncertainty. However, MHP took this as a right for opportunities. We continued with the culinary transformation of the company and focused on integration of Perotin Aptui into the group and group's efficiency. A number of strategic cost optimization initiatives were implemented and significant modernization investments made focusing on increasing capacity at PPE, improving working conditions at PPE, and improving animal welfare and wastewater treatment standards in Slovenia, Bosnia, and Herzegovina. Despite the challenges mentioned above, our annual financial performance was robust, with MHPs revenue decrease by only 7% year-on-year, constituting around 1.9 billion US dollars, mainly due to the lower results in grain growing segment driven by almost 30% decrease in harvest year-on-year. Export revenue was around 1 billion US dollars, 14% lower year-on-year, and mainly adversely affected by significantly deteriorated situation in export markets. Share of export revenue decreased from 58% to 53%. Adjusted EBITDA decreased by only 10% year-on-year to $340 million, driven mainly by a decrease in the paltry and related operation segment, and partly positively upset by an increase in the grain growing segment and the European operating segment. Adjustability margin remains stable year-on-year at around 18% and due to the resilience of our business model and the successful execution of our strategy. Let's look at MHP's financial results in greater details and by segment. Next slide, number seven. Thank you, Anastasia. No, no, no. Victoria, can I continue, please? Yeah. As you can see from slide number seven, and you can see that from the table here, contribution to MHP's revenue, voluntary and related operations input was almost 70%. And from the European operating segment, almost 20%. At the same time, poultry and grain growing operations contributed the most to the company's EBITDA, 57% and 28% respectively. Meat processing operations and other agri-segment contributions still remain the lowest, both to the revenue and EBITDA of MHP. However, with the prospects to increase, taking into account current transformation of the company and the culinary strategy implementation. The successful integration of Perutinab 2E continued in 2020, with PP contributing around $335 million to group's revenue in 2020. Adjusted EBITDA increased by 26% to $53 million. And despite the challenging situation in 2020, PP demonstrated strong resilience with an EBITDA margin of 16%. one of the highest margins among industry peers, demonstrating the success of our management team at integrating, managing, and improving efficiency of processes of a business outside Ukraine. So now I think we are ready to have a closer look at each business segment, and you can see that on our next three slides. Here I pass my word to Victoria. Thank you, Victoria.

Thank you, Anastasia. Good afternoon, everyone. Let me give you more color onto our poultry segment performance, slide number eight. Production volume of chicken meat remained stable year on year, and despite all the challenges, again, we never stopped production during the pandemic, even for a single day. Since the second quarter of 2020, all MHP's poultry production facilities in Ukraine have been operating at full capacity again, after a temporary production decrease in Q1 2020. Despite the difficulties of COVID-19, sales volume both on domestic and export markets grew by about 5% compared to the previous year. An increase in export sales was driven by a significant increase of sales to MENA region due to higher profitability per one kilo and more favorable market environment compared to the other region. This growth was partly offset by decrease in EU sales. Total revenue and poultry segment decreased by 5% year-on-year, driven mostly by decreased price of chicken meat, partly offset by increase in sales volume. Export price decreased by 6% in average, while the biggest decrease in price was on fillet in Europe and worldwide quarter prices. However, price in MENA region are higher and very attractive. Mid-price on domestic market decreased by 8% in hryvnias term and by 14% in dollars year-on-year, mainly affected by global COVID-19 pandemic and even influenza in Ukraine in Q1 last year. Since the beginning of Q2, 2020 price in Ukraine began to recover and reach in Q4 the level of Q4 2018 in hryvnias terms. In last quarter Q4 we faced additional challenges of increasing by 25% Portuguese cost in dollars, as a result of unexpected significant growth of grain protein price after bad harvest in Ukraine and the U.S. New harvest price of corn, maybe as you know, more than 60% compared to the last harvest. Consequently, market price of chicken in Ukraine began to increase starting from December 2020. As of today, the increase of chicken price compared to December 2020 around to 13-15%. We expect further growth of price of all types of meat to compensate cost increasing in Q2 this year as well. Financial result in poultry segment in Q4 is MHP's historical anti-record. substantially increased poultry production costs, while prices have only slightly started to recover before year-end. Gross profit of the segment in 2020 decreased by 30%, adjusted EBITDA before 41 standard effect per 1 kilo was 0.3%, Dollars reached by 25% low compared to the average of 2018, mainly due to decrease of chicken meat price and increase in cost in the fourth quarter. Let's move to the next slide, number nine. Unusual hot and dry weather conditions in the final weeks of growing season last year, particularly in the central region of Ukraine, Cherkassy and Vinnytsia, have led to significant lower yields across most of crops compared to the 2019 yields. At the same time, due to the diversification of MHP cropped land across Ukraine, MHP's average yield remained above the average in Ukraine. Corn yield was affected the most, being the lowest in our history, especially in Cherkasy region, with terrible figures, 3.3 tons per hectare, while in Sumy region, for example, yield remained relatively good, higher than 2.6. At the same time, well, sorry, 8.6, yeah. At the same time, in 2020, we had even better than usual yield in the west region of Ukraine. Negative impact from lower yield of crops was upset by significant increase in grain prices, those corn price increase more than 60% year-on-year. External grain segment revenue last year amounted to $134 million. The decrease in revenue was mainly due to the lower volumes of crop sold last year as a result of weaker harvest. EBDA net effect of IFRS 16 was $97 million, by 62 higher compared to the previous year as a result of higher prices. EBDA per hectare reached $272. Let's process to the slide number 10. Meat processing and other agriculture business performance was relatively stable. Volume of convenient food production grew slightly by 3% during the year, supported by continuing new product development program. Meat processing product volume decreased by 8% last year, mainly in traditional store segments. We expect to change volume dynamic to positive sign this year following the wider range of new product introduction to the market. Segment revenue in 2020 remained materially unchanged and amounts $144 million Adjusted EBDA amount 20 million remained at the same level compared to the previous year, supported by good result in milk business. Let's go to the slide number 11. The advantages of strong brand of Perutnino, as well as increased focus on meat processing product, have made it possible to increase sales volume of European segment despite coronavirus challenges. Following the strategy and increasing product sales of the European operating segment, last year increased by 5% and 9%, respectively, compared to the previous year. Average poultry price decreased by 6%. mainly due to decreased price in Bosnia, average price for meat processing product last year were relatively stable. European operating segment generates 335 million revenue and 53 million EBITDA last year, Adjusted EBDA increased by 20% year-on-year, mainly due to increased capacity and increased production cost efficiency. The management is very satisfied with the results that Perutnina shows. We have improved EBDA over the last two years almost by 60%. Please go to the slide number 12. A few words about our cash flow and liquidity position. Cash from operation decreased mainly in line with decrease in EBITDA and additional impact was due to the change in fair value biological assets in agricultural produce which represented non-cash adjustment. Net cash from operating activity amounted $71 million in 2020 compared to $502 million previous year, mainly due to the change in working capital. Use of funds in working capital during the last year was more related to higher income. December 2020, some areas referred to something mainly due to the increase of grain price, as well as due to the decrease in grain price in the last year. But, you know, it's not like 8.4, but the organization of the new product developed and routine up to the development. 2021 is around $120 million. Regarding debt, by the end of the period, company total debt was $1.5 billion and net debt around $1.2 billion. 99% of total debt is long-term debt, about 94% which Euro bonds. Our average weighted interest rate currently is below 7. In terms of liquidity, at the end of December, we had about $218 million cash, mostly in dollars. Due to the challenging in 2020 resulted in decrease in EBITDA, net debt to EBITDA ratio reached 3.6 versus Eurobond Covenant limit of 3.0 terms. Having 53% of revenue, more than $1 billion, mainly in dollar-dominated export revenue last year, We fully covered all our debt service expenses and other payment in foreign currency. Our currency balance remains strongly positive. And now I give the floor to Anastasia for update and outlook.

Thank you very much, Victoria. Thank you. We are on page number 13 of the presentation now. And in summary, I would like to say that the resilience and flexibility of the group's business model, combined with the management team's considerable experience, enabled the group to operate safely and efficiently during the year, despite all the challenges we mentioned. We all have to admit that 2020 was extremely challenging, but it became a new normality for us now and new normality for MHP. So we all know the rules. Strong companies and wise management adjust and transform. Weak and inefficient funds disappear from arena. So MHP continues to transform. We're doing so now. So first of all, we are transforming our company from an industrial into culinary company to become a food producer. We will further develop both our sales channels, routes to markets, and our product offerings. Second, we are implementing SAP across all business functions of MHP. Here we talk about digital, real-deal digital transformation of the company. Third, additional group-wide including PP investments will be made during 2021 to enable further advancements in the efficiency of business processes through modernization, innovation, and improvements in quality and cost control. These developments will include strategic projects such as a flow fiber or sunflower processing line and the brand new R&D complex and further investments in product flexibility. Next, we will continue to explore M&A opportunities and to potentially acquire or establish further meat processing or and poultry production companies internationally And finally, MHP is becoming more and more sustainable company. I would like to highlight here a key tenet of MHP's sustainable environmental policy and the clear sign of the company's commitment to taking a responsible approach to climate change. That is the company's target to become carbon neutral by 2030. So what do we expect going forward? Definitely, we expect policy prices in our major market to adjust gradually in response to increased production costs driven by high grain prices. Currently, export price for quarters and fillets have already recovered internationally and already increased since the beginning of 2021 by more than 20% compared to the lowest basis point. We will continue to rebalance and diversify our sales in order to withstand current and new challenges, at the same time sustain our profitability at high levels. Having been gradually transforming into a culinary company, together with marketing, sales, and R&D departments, as well as with a big MHP team, we will scale and develop culinary pilot projects. Before we start Q&A session, I would like to say that despite all challenges we face in 2020, MHP is targeted to maintain the status of the most cost-efficient company in the class with strong financial results. We have all resources to do so. Business model, our strategy, strong team, and innovative approaches. Thank you very much. I think now we are ready for questions. Team.

Thank you, Anastasia. So we will now start the Q&A session. If you have any questions, please press star two on your telephone and wait for your name to be called. If you're dialed in via the web, you can ask a question by either text or voice. So I'll just give it a moment or two. Thank you. So we have a question from Konstantin Fastovets from Adamant Capital. Konstantin, go ahead.

Hi, everyone. Thank you for the call. I have a couple of questions.

Yeah, maybe let's start with the poultry segment. So the first one is that during the last conference call, you were guiding for costs in the segment to grow about 15% quarter on quarter. And in the end, it turned out to be 25%. So the first question is, why is there such a large difference? Was there some sort of a factor that you didn't take into account? perhaps you could remind us how corn is sold internally, at what price, and at what time. So anything that you could help with that.

First of all, for your information, yes, when I speak about price, the cost of production in the CRE is quarter on quarter approximately by, no, if we are by 25, 22 or 23 percent, yeah. First of all, because protein, it was higher than we predicted. Regarding corn, we internally, our price between segments, it was approximately around $200. But what is very important to emphasize that we last year we gathered very low harvest and we had to buy corn from the market right okay and when you when you when you sell internally do you sell at like uh during the harvesting time yes We calculate because we always, yeah, it is our clear policy. We always sell in between the segment at price which we had in Ukraine during the harvesting time.

Okay. Okay. So that, okay. Okay. So you already knew the price, right? When we did our last call, you already knew what the price was for corn internally?

Yes, maybe we just finalized calculating, because I remember that we had calls, it seems to me, by the 15th of November, and maybe the time we finalized our gathering campaign, and you know the price of corn during the fourth quarter had changed a lot of times.

Yeah, that's why I was wondering, because the dynamic was really rapid for the increase. Okay, okay, so you would say it's mostly the protein that you didn't take into account when you were given the guidance?

Sorry, please repeat the regarding code.

The guidance, so the main question is that during the last call you were guiding for about a 15% increase, right, and it turns out to be about 25.

Yes, yes, I understand it's 22, yeah, because the protein, yeah, protein, yeah, regarding sunflower, yes, protein from sunflower and from soy, yes.

Okay, and with that, could you also comment on why there was no such increase at Puritnina? Because from what I'm seeing, actually, the cost went down at Puritnina. Why is there such a difference between the two business segments?

To be honest, in the first quarter, the price of corn did not increase so significantly in Ukraine during the harvesting time. Price of corn increase in Balkan just started this 1st of January. Yeah.

Okay, so does that imply that we're going to see an increase later on in Perednina?

Yes, yes, yeah.

Okay, so you expect margins to go down. and then, you know, the next first quarter.

No, no, no, just margin will go down, just, yeah, but at the same time, Perutnina understands it, and Perutnina wants to increase price. Yeah, maybe increasing cost price will compensate increasing cost production.

Okay. Could you also say, I don't know if you've done this analysis, on where you are on the cost curve,

for poultry globally for example where you compare with Brazil foods or other producers are you around where are you on the curve I'm sure that despite the situation with price of corn because we know the price of corn increased not just in Ukraine in the USA in the Brazilian food and at the same time we understand that we remain one of the most efficient poultry producers in the world That is why right now we see that the world price of meat is starting to increase. Because if you think about the current price of quotas, because you know from the 12 million of import-export poultry meat, 7 million is the real quotas. And now the world price of quotas increased compared to, for example, in January by 25%.

Okay, so you think that despite the fact that in the fourth quarter you had the spike in cost, you still remain at the bottom of the cluster?

Yes, because it is not something special only with our cost production, because it has happened with all meat producers in the world.

Okay, and then finally, could you give us a bit more guidance on where you see costs and prices in 21? So what kind of growth do you think you're going to be seeing there, and also on the margins?

I mean, you closed this year. If you speak about cost of production for the nine months, we understand that our cost of production will remain the same level that we had during the fourth quarter. plus minus few percent. Yeah, but we have some uncertainty about because nobody knows what price of corn and sunflower will be since the new season. If your price remains at the same level, yes, we will keep our price very similar that we had in the first quarter.

Okay, and with regard to prices, for poultry internally and externally in terms of exports, where do you see, what kind of a dynamic do you expect for next year?

Ah, price. No, yes, as I told previously, price in Ukraine, yes, increased until today approximately by 13%, and we suppose that we will see following increasing of price of different kind of meat, not just of poultry. Yeah, and we see the good positive dynamics of world price, not just of quarter, and we see signal of increasing price in Europe. Not so high than quarter's price, just 5% maybe, but I think that price will go up.

Okay. For compensating increase. Yeah, yeah, so it will go up. probably, you know, really likely is going to go up. The question is, you know, by how much, you know, what is sort of, what are you budgeting? Are you budgeting like a 10% increase year-on-year, 15% roughly? Could you give us the figure for the year?

Yes, it's a very interesting question. Yes, we will put in our budget the figures is both around 12% total year-on-year.

Sorry, can you repeat what the percent is?

Twelve percent. Twelve percent.

Twelve percent. Okay. Okay. Got it. Got it. Thank you very much. Thank you.

Thank you. So, we also have a question from Olesia at the test suite. So, Olesia, go ahead. I think we lost Olesia, so let's move on. We have a question also from Xenia Mishinkina. Xenia, can you hear us? Can you go ahead?

Yes, hi. Thank you for the presentation. I have a question on your leverage. Given that you have now exceeded the covenants, how do you see your leverage going forward? Thank you.

And what steps do you... Yeah, thank you for your question. Yeah, thank you very much for your question. Yeah, this current of leverage, 3.6, is not comfortable for us, and we understand that we achieved this leverage because our ABDA of 2020, it was lower than our expectation because you understand that 2020, it was very, very challenging year for MHP. No, just not for MHP, for a lot of different producers. But based on our budget, we expect that by the end of the year, we expect that our leverage will be around 3, 3.2.

Hello?

Hello, yes. Sorry, can you hear me?

Yes, yes.

I think the line got cut off. Yeah, so you expected to come down to around 3, did you say?

Yeah, 3.2, yeah.

Okay, thank you. And what was the main driver behind EBITDA decline?

In 2020?

Yes.

Yeah, the main driver, yeah, because it's still very challenging in 2020, but anyway, we increased our sales volume both on export and in Ukraine, but at the same time, price last year was low compared to the previous year, both in Ukraine and export. It is the main, yeah. And additionally, in the fourth quarter, cost of poultry increased by around 22%. Okay.

And could you please comment also around the situation in terms of the bird flu?

Yeah, today, yes.

If I can pick up this, okay. So, actually... Actually, Ukraine has been experiencing a number of outbreaks of avian influenza since December 2020. And it's not only in Ukraine, as you understand, it's a kind of, as you may assume, a pandemic as well, also in the European Union, especially at the moment. And, of course, it sets certain restrictions on export operations, especially if there is no, and at that time, actually, at the beginning of this year or at the end of last year, we didn't have still in place the regionalization between Ukraine and the European Union. And actually, it's a very good, we have very good news that just recently, kind of a week ago, so there is a deal right now. And so MHP, as a company producing chicken meat in Ukraine, can start again exports to the European Union. However, I have to say that the biosecurity measures at MHP are very strong, and we didn't have any cases Okay.

Thank you very much. So basically, you expect the volumes to rebound this year in terms of exports?

Stable volumes. Stable volumes if you talk about exports and local sales, and also if you talk about production volumes as well. I would say stable production and sales. That's right.

Thank you.

You're welcome. Thank you. So we also have a question online from Dan Angelache. Dan, I'm going to unmute you. I notice you've asked the question by voice as well. So, Dan, if you'd like to go ahead and ask your question.

Hello. Thank you for the presentation. I just have one question. I know you have some bonds due in 2024. I was just wondering if you're looking to refinance this, or are you thinking about the leverage in any way? Thank you. That's it.

Thank you for your question. Generally, yes, we are thinking to refinance 2024 bond, but we think that now is too early. But anyway, we... Okay, thank you.

We also have a question from Ilya Timchenko at Red Intelligence. Ilya, would you like to go ahead?

Great. Yeah, can you hear me? Yes, yes.

Hello?

Great. Perfect. So I have a few questions. First one is I know that you mentioned about the possibility of an M&A, so international expansion. So is it possible at all to clarify in which country or countries, regions that you have plans for? I know that back in 2018 you were interested in purchasing a French poultry producer, and I also know that you're a competitor to Upstar Union. They have plants and egg production in Latvia. Just was wondering if you could clarify a little bit more of that.

Thank you for your question. Our priority number one is Europe. Because we are very satisfied with our acquisition in Peru. And we continue to consider different possibilities to buy some meat and poultry producers in Europe.

And is it possible to clarify which country?

Yes, the west of Europe, different countries. We don't want to, yeah.

Great. And my other question is, if you have any further vertical integration expansion plans, domestically speaking, as I understand, you recently launched the retail branch. I believe in Ukraine. Anything else within your vertical domestic expansion?

Thank you for the question. Yes, we are launching another market together with our franchisee. To be honest, we have a franchisee and different outlet of our franchisee. It is some new model of retail outlet. Yeah, and now we're considering a few models for donors. It is not Donors Cafe. Yeah, together with our franchising, with our current partners. Yeah, because for us it's very important to be close to our client. Yeah, to be close to our client and our strategy to increase sales of our chicken with value added product. Yeah, and different convenient food, ready to eat product. And that is why the direct channels to our client is very, very important.

Thank you for that. One more question is in regards to if it's possible for you to provide more Clarity on what market share does MHP make up in Ukraine to compare to KSG Agro, Penn, Korchak, and Delta, Wilmar?

Sorry, maybe clarify a question. Yes, our market share compare with whom?

With all the companies.

To be honest, our market share of industrial production market in Ukraine approximately maybe today around 65%, but at the same time you understand that 50% of total our production volume always sent for the export. On domestic market, I think that our, because, yeah, because we need to understand that Ukraine today is continuing to import part of meat and approximately 50,000, 60,000 tons every year Ukraine imports meat. It is mostly MDM. It is not the meat for supermarket, for retail. It is just mostly for meat processing company, but MDM. And approximately more than 1,020 tons of chicken in Ukraine produced by householders. That is why our market share of total consumption, yes, market in Ukraine around 35-37%. Thank you for that.

And I was also wondering if MHP is expecting any additional funding from IFI, such as EBRD, EIB, or IFC?

No, because today we have more than $300 million on drawing line. That is why. And we have in cash in our account around $200 million. Right now, no.

I see. And one last question. I was just wondering in terms of if you're keeping track with the EU regulations in terms with the duty-free quotas and specifically how that would affect MHP.

Rano actually changes on that front from 2019 if we talk about the same topic, right? If we are talking about EU quotas, right? So still the same volume is in place, 70,000 tons of chicken filet. This is the quota for the year. But there is an additional quota as soon as the UK left the European Union. And according to the agreement between Ukraine and the United Kingdom, There is an annual quota, at least now, for this year, I mean, which is around 12,000 tons.

I got it. Thank you so much, Victoria and Anastasia. Thank you.

Thank you. Thank you.

Thank you. We also have a question from Yulia Dimando from Federated Hermes. Yulia, go ahead.

Hi, thank you very much for the presentation. Most of my questions have been answered, but I just have one more question, please. Can you give us some guidance on your working capital for 2021? When do you expect the outflow that you saw in Q4 to reverse? Thank you.

Your question about investment in working capital, we don't expect any big investment in working capital around only just $15 million, maybe $15.20, because we understand that we have planned to increase price, and that is why we understand that we will have investment to increase our trade receivables.

Yeah, but it is minimal investment.

Okay, thank you. We also have a question from Paul Sheridan at Silver Edge, and Paul is asking, with respect to the grain growing segment, could you please describe the current condition of the crops in the ground?

No, current condition of our crops is good. Yeah, current condition is good.

Yes, because as Victoria mentioned, actually, our crops, of course, these are our winter crops, right? The weather during the winter was very good, and the spring sowing campaign hasn't started yet. So it's too early to talk about our major crops like corn, soya, or sunflower, which will be only sown in March, April, sorry. March and April.

Okay, thank you. We have a question from Natalia Stugotska at Dragon Capital. Natalia, go ahead.

Good afternoon. Thank you very much for the presentation. I also have a couple of questions on the grain growing segment. First one would be, how do you expect your costs in the farming segment, your cost per hectare to evolve in 2021 for upcoming sowing campaign? And the second one, if the company have already pre-sold part of its 2021 crop harvest, and if yes, what share at what prices? Thank you.

Thank you for the question. Regarding our cost in grain segment, we expect that this cost in dollar sale will remain the same level that we had in 2020. Regarding our forward contract, we are with salt, but not so significant part.

Okay, so it's like less than quarter, less than one-third, something like that?

No, less than, yeah, I think it's less, maybe around 10-12%, 15%.

Okay, thank you. So the company is betting on further growth in crop prices closer to the harvesting? Yeah. Okay, thank you very much. Thank you.

Thank you. We have one more question currently, so just a reminder. Yeah. If you do want to ask a question, please press star 2 on your keypad. So the question we have is a web question from Dimitri Turin from EVEX Capital. Dimitri is asking, does MHP have a plan to reduce the company's total debt this year? And is it possible to cut the total debt to around $1 billion in the medium term?

Yes, we will reduce, but very insignificant, because as I said previously, 94% of total our debt is Eurobonds. Yes, that is why we will reduce. We have planned not so significant to reduce our debt. We have planned how to increase our EBITDA for this year.

Okay, so we have another question. So Konstantin Fastivets from Adamant Capital has another question. Konstantin, go ahead.

Thank you. Yeah, I just wanted to ask on CapEx, could you guide us on CapEx for next year, especially given that... CapEx for the year 2020. Yeah. 2020. Okay, and does that include your initiatives to become a culinary company? So are you implementing any projects that we should be aware of anything large?

Yes, yes, yes. They include our project for culinary company to industrial kitchen, yes.

Can you mention a bit more on what they are?

It is approximately 20 million.

20 million for the culinary projects, okay.

Yes.

Okay, and one more question on dividends. So if you end up hitting your target leverage by the end of next year of 3 to 3.2, as you mentioned, do you expect in this scenario, would you expect dividends to go back up to where they were before 2020? 80 million, I think, is what you had before you dropped down to 30.

Yeah, it's a very good question, but it seems to me now to tell about this is too old there. No, we will decide, yeah. Potentially, yes, we have to tension to increase dividends, but anyway, we cannot say right now.

Okay, sure. Thank you.

Okay, thank you very much. So we have no more questions. So I'll now hand back over to Anastasia for closing remarks.

Yes, thank you very much, Tim. Thank you very much, all participants. Thank you very much for the MHP team. That was a very good presentation together with all your questions. Once again, if you would like to ask your questions, please send us your emails or give us a call. And for now, thank you very much and have a good afternoon. Thank you and goodbye.

Thank you. Thank you. Thank you very much.