MHP SE

Good afternoon, everyone, and welcome to the MHP fourth quarter and four-year results 2021. I will now hand over to Anastasia to make the introduction.

Dear shareholders and stakeholders, good afternoon and good morning. Thank you for joining us today for MHP's conference call. This is Anastasia Sobotyuk, Director of Investor Relations and International Communications. On the call today, together with Victoria Kapelushnaya, CFO of MHP, we will discuss MHP financial and operational results for 2021 in general and by segments, as well as current operational environment and expectations for 2022, taking into account that Ukraine is now at war with Russia. Today's call is based on information released earlier today publicly However, during our call, we will discuss our projections and plans based on our assumptions, domestic and international trends. Please take it into consideration. After the presentation, we will be glad to answer all your questions. So let's start. We go on slide number four of the presentation. So we have a different start of the presentation of the results today because Ukraine is at war. The military invasion of Ukraine by Russia forces began at 5 a.m. on 24th of February, marking the beginning of a full-scale war across Ukraine. Since the beginning of the war, the company has been facing significant logistical and infrastructure challenges in Ukraine. While MHP has been able to continue commercial sales in Ukraine since the war began, export sales ceased as a result of port being closed, while export delivery by trucks remains practically impossible. During March and April, MHP team has been developing alternative logistic routes for exports, enabling yet a limited volumes to be delivered outside of Ukraine. Because of the restricted sales both inside and outside the country, MHP has to decrease poultry capacity utilization to 80 to 85%. Due to food storage shelling by the Russian forces in March, MHP lost over 3,000 tons of poultry products, which is over 6 million in U.S. doll tons. The facility was Ukraine's largest warehouse for storage of frozen products and was predominantly used by large local retail chains. As hostilities in the Donetsk region intensified, in April MHP decided to temporarily suspend operations of Ukrainian people. And of course, we took care, proper care of our people. We managed to relocate them. Despite different challenges, MHP is on the way to complete this year's sewing campaign. MHP has a key responsibility in the food security of Ukraine. MHP has continued its operation despite significant difficulties and disruptions. MHP fully understands how important poultry production is for Ukraine. and its population at this difficult time. All MHP employees are fully committed to every effort to ensure that Ukrainians have access to food now and in future. Since the war began, the company has provided around 11,000 tons of free of charge poultry products, other food, equipment, cars, diesel, and different materials as part of its humanitarian mission. I think we are ready to come back to the company's results now. And we go together on slide number six of the presentation. We start with operational updates. Despite all challenges at the beginning of 2021, avian influenza and temporarily export bans because of that, the group delivered an exceptional performance in 2021, driven by a combination of excellent weather conditions, which resulted in a record harvest and strong prices for grains and poultry products. Poultry production increased by 3% to around 754,000 tons of chicken meat, while sales remained stable. 221 harvest was one of the MHP's record harvest with over 2.6 million tons of crops, and these crops are being used mainly internally for quarter production and, of course, traditionally for exports. Financial results for the year look as follows. Revenue increased by 24% to over 2.3 billion U.S. dollars, with export revenue representing 53% of total revenue, mainly driven by an increase in exports of poultry meat. Adjustability increased by 91%, and reached 648 million US dollars, driven mainly by excellent results in grain growing operations. As a result of substantial EBITDA growth, NASDAQ to LTM EBITDA ratio instituted below two times. Let's go on slide number seven of the presentation. Key financials for the fourth quarter and full year here. MHP's revenue and export revenue have been gradually growing quarter by quarter, as you can see on the chart on the left, driven by positive results across all business segments. Revenue in the fourth quarter of 2021 increased by 46% year-on-year to $725 million in a quarter, while export revenue increased by 34% to around $422 million, mainly driven by strong exports, of poultry and grains. Annual results in net profit was $353 million, which was almost five times more than net profit in 2020. Let's go on to the next slide. Slide number eight of the presentation, which shows us the financial results by segment. The vast majority of the revenue in 2021 traditionally was generated by poultry and related operation segment, 68%, and by 13 October, by the European operation segment, which is 17%. At the same time, grain growing and poultry operations contributed the most to the company's EBITDA. That was 52% and 41% respectively. The biggest contributor to the output revenue was from pulp reparations, and that constituted almost one billion US dollars. Let's have a closer look at each business segment and results on our next slide. And here I present my word to Gloria.

Thank you, Anastasia. Good afternoon, everyone. Let's have a look at MHP Ukraine poultry segment performance, slide number nine. It is important to highlight that during 2021, all MHP poultry production facilities in Ukraine have been operated at full capacity, despite different challenges at the beginning of the year, as an influenza outbreak and coronavirus. As you can see, MHP delivered exceptional strong results last year compared to the previous year, driven mainly by strong poultry price, both in Ukraine and internationally. Total revenue in poultry segment increased by 24% year-on-year, driven mostly by increase in poultry prices. Experts driven by price growth for chicken breast and fillet in EU and quarters and small chicken in MENA region. In Ukraine, gradually compensating a substantial increase in poultry production costs and reaching the same level of profitability as in pre-COVID-19 times. Poultry production costs last year increased by 28% in the world, driven by significant growth of grain protein price. Quarter-on-quarter poultry costs also increased, mainly reflected higher cost of sunflower, soybean cake and fodder. As well, it's increasing price for energy, especially mainly for gas and packaging materials. Let's move to the next slide, number 10. Our grain growing segment has performed exceptionally and historically strong results. EBITDA last year amounts almost $400 million compared to the $150 million last year driven mainly by impressive strong harvest of winter crops. over 20% higher year-on-year, and spring crops over 60% year-on-year, as well as very strong international grain prices, around 40% increase year-on-year. EVDA projections last year reached amount of $1,000, which is a record result in MHP history. Let's process onto the slide number 11. Meat processing business, following a strategy of culinary transformation of the company, has a positive trend in volume and price, mainly due to increased sales of more expensive SKU and expansion of cooperation with large horticulture channels with more marginal product sales increased. Adjusted TBDA of this segment decreased, driven mainly by increase in raw material price, which has not yet been offset by increase in price of meat processing product. Let's go to the slide number 12. Several words about . Growth incapacity in Serbia and Croatia results in 16% increase in poultry sales year-on-year, which resulted in a BDA growth of 20% year-on-year, Moreover, the significant EBITDA growth is attributable to high operation efficiency, which allows to offset growing cost of raw materials, positive impact from appreciation of euro against dollar, as well as one of effects related to insurance and some changes in accounting treatment, but very insignificant amount, around 1.5 million euros. Let's go to slide number 13, a few words about our cash flow and liquidity position. Cash from operations increased mainly in line with increase of EBITDA and additional impact was due to the change in fair value of biological assets and agricultural produce, which represents non-cash adjustment. Use of funds in working capital during 2021 was mostly related to high investment in stocks of corn designed for internal use mainly and pulling the high yield last year and significantly high our investment in sowing in sunflower seeds as well as increasing price on sunflower seeds. Sunflower seeds and soil seeds. Total capex last year amounted $140 million, mainly related to requirements in maintenance, established state-of-the-art culinary centers in Kiev, improving and expansion in Perutnina production facility, and modernization and cost optimization projects, as well as development of new culinary products. Regarding debt, Due to significant improvement in EBITDA, we substantially improved leverage net debt to EBITDA and ratio was 1.9 versus Eurobond Covenant limit 3. At the end of the period, MHP total debt was 1.5 billion and net debt about 1.2 billion dollars. 99% of total our debt was long-term debt, about 96% of which Eurobonds. Our average rate interest rate was 6.7%. In terms of liquidity, at the end of December, we had around $275 million in cash. Our currency balance remains strongly positive and our dollar-determinated export revenue fully covers all our debt service and other payments in foreign currency. And now I give the floor to Anastasia for the update and outlook.