MHP SE

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to MHP's Q1 2022 Financial Results Conference Call on the 17th of June 2022. At this time, all participant lines are in listen-only mode. The format of the call today will be, as usual, a presentation by the management and IR team, followed by a question and answer session. Without further ado, I would now like to pass the line to MHP. Anastasia, the floor is yours.

Thank you, Michael. Dear stakeholders, good afternoon and good morning. Thank you for joining us today for MHP's conference call. I am Anastasia Sobotuk, Director of Investor Relations and International Communications. On the call today, together with Victoria Kapelushna, CFO of MHP, we will discuss MHP's financial and operational results for the first quarter of 2022, as well as current operational environment and expectations for this year, taking into account that Ukraine is now at war with Russia. This 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. We are now on page number three of the presentation. Let me start from the general overview of the first quarter of 2022. First of all, on 21st of February, Russia invaded Ukraine. And the war started. And today is 114th day of the terrorism and cruelty, the vast majority of which you are aware of through public information. Ukrainians, as well as the democratic society, are all fighting for peace. And we all want Ukraine's victory as soon as possible. But we are still on the way to it and need to keep on going, facing different and significant challenges. war time brought us. Ukraine heavily requires international support now and of course in the future. We need this support to fight with aggressor and terrorism. We need this support to rebuild our country after the war as based on preliminary estimates it will take Ukraine around three years after this terrible war finishes to rebuild the economy of the country. MHP team continues to undertake all possible efforts to manage all difficulties and obstacles. Our unity is strong, and therefore Ukraine can rely on MHP in terms of food security, which is now a hot topic not only in Ukraine, but in the world. Let me now proceed with the company's results for the first quote of the year, slide number five. It is rather strange to say, but that was a good start of the year, mainly driven by strong operations in January and in February. Revenue increased by 24% to approximately $550 million, with export revenue of around $308 million. EBITDA was $41 million, 19% lower year-on-year, with war-related expenses, first time in our history of around $25 million. Next slide, number six. This slide shows you financial results by segment. As you can see from the table, the vast majority of revenue, as well as EBITDA, in the first quarter of 2022 arrived from poultry and related operations. Traditionally, due to seasonality effects, but also because of the start of the war in Ukraine at this time, Continued to the contribution to the revenue from grain growing segment was rather low, 6% only. Let's have a closer look at each business segment on our next slide. And here I pass my vote to Victoria.

Thank you, Anastasia. Yeah, thank you, Anastasia. Good afternoon, everyone. Let's have a look at MHP Ukrainian poultry segment performance. Slide number seven. It is important to highlight that today, because of incredibly challenging environment, MHP is operating at around 80-85% poultry capacity utilization. Despite of significant logistical and infrastructure challenges in Ukraine, MHP managed to deliver good results not enough good results in Q1 2022, which are, however, driven predominantly by strong results in January and February. Results of March were very weak with negative results of MBDA, first time in our history. Total revenue and purchase segment increased by 20% year-on-year. driven mostly by increase in poultry and vegetable oil prices on export market. Poultry price in Ukraine remains stable compared to the first quarter last year. With regard to poultry production costs, year-on-year costs increased by 25% in U.S. dollars, driven by growth of grain and utilities prices. Quarter and quarter poultry costs also increased, mainly reflating higher cost of gas prices, salary, and decrease in production volume in March, which was partially offset by decreased cost of protein cake. An additional negative impact in poultry results was due to incurring significant losses as a result of continuous war in Ukraine, donations, damage, write-off, and other expenses. Let's move on to the next slide, number eight. MHP's spring sowing campaign has been completed. According to the plan, all winter crops are currently winter and spring crops are currently in good condition. We gave this segment in Q1 amount $2 million. mainly driven by grain export trading on January and February. Let's proceed to the slide number nine. Injected TBD of this segment decreased, mainly driven by war-related challenges, namely disrupted delivery of raw material and challenges logistics, which led to reduced sales volume and write-off of inventories. Let's proceed to the slide number 10, several words about Pirutnina Ptui, growth in capacity in Serbia and Croatia, as well as positive price dynamic resulting around 11% increase in revenue year-on-year, which resulted in a BDA growth by $2 million year-on-year. We will continue to invest into development of Pirutnina Ptui through 2022, raising its operational efficiency and increased production volumes. Slide number 11. Taking into account current operational environment, having got a good loan portfolio structure with majority of long-term liabilities and deferred short-term loans and Eurobonds coupon payments, The company managed to maintain its liquidity at an efficient for business need level, keeping its net debt to EBITDA ratio at 1.9, the same level at the beginning of the year. Due to the fact that MHP has to invest significant resource in working capital in 2022, The company liquidity is priority to management team. It is under our constraints, control, and intention. Moreover, SG&A and other operating expenses, as well as CAPEX, have been reduced to the minimum requirement to meet the primary needs of groups or businesses. Today, the group's cash balance is around 200 million dollars. Use funds in working capital during the Q1 was mostly related to investment in inventory, primarily to grain growing entities in respect to spring sowing campaigns. Total capital in Q1 amounted to $34 million, mainly related to modernization products, new product development, and maintenance and improving of Pirutinaptui production facilities. I give the floor to Anastasia to conclude the presentation.