MHP SE

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to MHP's Q3 and 9 Months 2021 Financial Results Conference Call on the 18th of November, 2021. At this time, all participant lines are in listen-only mode. The format of today's call will be a presentation by the MHP management and IR team, followed by a question and answer session. So without further ado, I would now like to pass the line to MHP. Anastasia, the floor is yours.

Thank you, Michael. Good afternoon and good morning. Thank you for joining us today for MHP's conference call. As Michael said, my name is Anastasia Sabatuka. I'm a director of investor relations. And also on the call today, of course, we will discuss together with Victoria our MHP, our company's results, financial results for the third quarter and nine months of 2021. Today's call is based on information released earlier today. There is press release and financial statements. However, during our call, we will discuss our projections and plans based on our assumptions and the domestic and international trends. Please take it into account. So, as I said, together with the CFO of MHP, Victoria Kapelushina, we will present our financial results of the company. in general and by segments. And after the presentation, we will be glad to answer your questions. So let us start. We go on slide number four of the presentation. I hope you go the presentation well in advance. So we start with the macro environment. Ukraine's GDP in the third quarter of 2021 was up by 2.4%. with inflation ratio which increased to 10%. Since the end of September, Ukrainian currency has been strengthening and as of today, it has appreciated by around 2% year-on-year. With regard to COVID-19 landscape, as of today, Ukraine is number 16 in the world with rather high daily statistics in new cases and deaths, unfortunately. and also, unfortunately, with a rather low level of vaccinated people. It is not because Ukraine is lacking vaccines, but because there is a big number of people who are against, actually, who are against the vaccination. As of today, only more than 22% of the Ukrainian population is fully vaccinated. Let us come back to the company's results, and we go together with you on slide number six of the presentation. So let me start with operational highlights for the period of nine months of 2021. Paltry sales remained stable at around 522,000 tonnes. Paltry exports increased by 8% and reached around 300,000 tonnes in nine months. driven by increased sales volumes predominantly to the MENA region. Total share of exports out of the total poultry sales volumes increased to 57%, from 53% in 9 months of 2020. Financial results for 9 months of 2021 looks as follows. Revenue increased by 16% and reached $1,647,000,000 U.S., with export revenue representing 51% of total revenue, mainly driven by an increase in exports of poultry meat. Adjusted EBITDA increased by 72% and reached $519 million, driven mainly by excellent results in grain growing operations. As a result of substantial EBITDA growth, not that the LTM EBITDA ratio constituted around 2.1%. Let's go on slide number seven of the presentation. So here we have the key financials for the third quarter of the year. MHP's revenue increased by 20% and reached $658 million, with export revenue represented around 52%. Adjusted EBITDA margin increased by around 115% year-on-year and reached 186 million US dollars with EBITDA margin of 28% as a result of positive results both in poultry and grain growing operation segments. Slide number eight. It shows us our financial results by segment. And as you can see from the table, the vast majority of revenue in nine months of 2021 came from poultry and related operations. That was 69%. And of course, the European operational segment, it was 18%. At the same time, grain growing and poultry operations contributed the most to the company's EBITDA, 50% and 41% respectively. The biggest contributor to export revenue was from poultry operations. That constituted 699 million US dollars. Let's have a closer look at each business segment and results on our next slide. Here I pass my word to Victoria. Thank you, Anastasia.

Good afternoon, everyone. Let's have a look at MHPA Ukrainian poultry segment performance slide number nine. It is important to highlight During the nine months of the year, all MHP poultry production facilities in Ukraine have been operated at full capacity. As you can see, MHP delivered exceptional strong results in Q3 compared to the Q3 2020, driven mainly by strong poultry provides both in Ukraine and internationally. Total revenue in poultry segment increased by 20% year-on-year, driven mostly by increase in poultry price, export driven by price growth of chicken fillet in EU and quotas international. In Ukraine, gradually compensating a substantial increase in poultry production costs and we reached the same level of profitability as in pre-COVID time. Poultry production costs In Q3 2020, increase by 21% in U.S. year-on-year, driven by significant growth of grain and protein prices. Let's move to the next slide, number 10. Our grain growing segment has performed exceptionally strong results this year. EBITDA in nine months constituted 261 million, compared to the 70-80 million last year. The mainly attitude to impressive higher harvest of winter crops over 20% higher year-on-year and spring crops over the 50% year-on-year. As well as strong international grain price which around 40% higher compared to the last year. EBITDA this year per hectare mixed crops is expected to reach record more than $900 per hectare. Let's go to the slide number 11. Need protesting business perform well following a strategy to culinary and transformation of company which is a positive trend in volume and price. mainly due to increased sales, more expensive SKU, an expansion of cooperation with large horeca channels such as McDonald's, Ukraine, KHC, since the second quarter this year with more marginal product sales increase. Adjusted at the same time, adjusted EBITDA of this segment decreased, driven mainly by increase in raw material price, poultry meat, spice and packaging materials, which has not yet been offset by an increase in price of meat processing products. We expect to achieve profitability of pre-COVID time in the beginning of next year. Let's proceed to the slide number 12, several words about Pirotnin Aptui. Growth in capacity in Serbia and Croatia resulted in 15% increase in poultry sales year-on-year, which resulted in ABDA growth around 30% year-on-year for 9 months. Moreover, the significant ABDA growth is attributable to high operation efficiency, which allowed to offset growing cost of raw material, positive impact from appreciation of euro against dollars, as well as $1 million one-off effect related to insurance and some change in accounting treatments from past events. We will continue to invest into development of peritoneal operations through 2022, rising operational efficiency and sales volumes. Slide number 13, a few words about our cash flow and liquidity position. Cash from operation increased mainly in line with increase of EBITDA. An additional impact was due to change in fair value of biological assets and agricultural produce, which represented non-cash adjustment. Use of fund in working capital during the Q3 was mostly related in low investment in inventory. designed for international internal consumption total complex in q3 amounts 38 million mainly related to modernization projects new product developed maintenance and routine up to production facilities for the development total complex this year is expected to be around 120 million dollars regarding that due to significant improvement in the bda we substantially improved net debt ratio net debt to EBITDA to 2.1 versus EBC limit 3. Moreover, we expect further improved LTA-EBITDA in Q4. At the end of the period of 9 months MHP, total debt was nearly $1.5 billion and net debt about 1.2. 99% of total debt is long-term debt. 96 of them is Eurobond. Our average weight interest rate currently is 6.7. In term liquidity, at the end of September, we had around $300 million in cash, in dollars. Our currency balance, as always, remains strongly positive, and all our dollar-dominated export revenue full covered all our debt service expenses and other payment in foreign currencies. And now I give the floor to Anastasia for an update and outlook. Thank you, Victoria.