MHP SE

Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to MHP's first quarter 2023 financial results call. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by MHP's management and IR team, followed by a Q&A. So without further ado, I would now like to pass the line to MHP's team. Anastasia, the floor is yours.

Thank you very much, team. Dear stakeholders, good afternoon and good morning. Thank you for joining us today for MHP's conference call. I'm Anastasia Sabatyuk, Director of Investor Relations and International Communications. On the call today, together with Victoria Kapelushnaya, CFO of MHP, we will discuss MHP's financial and operational results for the first quarter of 2023, as well as current operational environment and expectations for 2023, taking into account that war in Ukraine continues. 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. Let me proceed with the presentation, and we all go to page number three with macrofundamentals. Let me start from how we live and operate. I would like to note that from October 2022 and up to now, Russia has been launching a number of missile and drone attacks against energy and the civil infrastructure of Ukraine, targeting Kyiv massively during the last two weeks. The terrorist attacks seriously and adversely affected energy distribution across Ukraine. In the first quarter of 2023, Ukrainian citizens and companies, including MHP, faced complex challenges related to providing energy to their homes and production facilities. The impact of the war in Ukraine remains unclear and can change seriously, quickly, and without any notice. When we look at macroenvironment in the first quarter of 2023, it was as follows. Ukrainian economy has been adjusting to the war environment, heavily supported by international donors. Black Sea grain deal has been prolongated just yesterday by another two months. However, we understand that operational routine remains challenging due to delays in ship checks in the Bosphorus from the Russian authorities. So for traders in Ukraine, it is absolutely difficult, if not impossible, to plan any logistics National Bank of Ukraine forecast GDP growth of 2% in 2023 and annual inflation of 15%, with around 27% inflation in 2022, for your records only, only if there is no further deterioration of the hostilities. The currency ratio remains more or less stable. Let me proceed with the company's results. and we go to page number five of the presentation. So we are on slide number five, key financials. Sorry. MHP is reporting good operational and financial results for the first quarter of 2023, thanks to strong demand, positive price movement, and minimal disruption to operations as a result of the enormous amount of work undertaken by the MHP teams since the beginning of the war. It should be noted that operational and financial results in the first quarter, 2022, last year, were more seriously affected by disruptions in the early stages of the war. Results for the next periods of this year may again be adversely affected by war-related challenges, but of course, they are not under MHP's control. When comparing the first quarter of 2023 results generated by businesses in Ukraine, please keep in mind that operational environment in March last year, that was the first full month of the war, was absolutely different to March 2023. And therefore, operational and financial results of MHP in the first quarter last year were significantly and negatively affected by war-related challenges Ukraine has been facing since then. Therefore, I would suggest to focus on the comparison of the first quarter 2023 with the fourth quarter last year. It is more relevant. In detail, the results for the first quarter 2023 were following. Revenue increased by 35% year-on-year and constituted $746 million and was down 3% quarter-on-quarter. War-related expenses decreased substantially by 77% to $6 million, and that was $26 million in the first quarter last year. Export revenue increased by 69% to $520 million, which is 70% of total revenue, and increased 6% by 6% quarter-on-quarter. Adjusted EBITDA net of ARS-16 increased year-on-year to $117 million from $43 million last year, same period, and was 7% higher quarter-on-quarter. Adjusted EBITDA margin increased to 16% from 8% in the first quarter last year and from 14% in the fourth quarter 2022. Let's proceed to page number six, where we can see the 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 2023 was generated in poultry and related operations, which included the results from the crushing of vegetable oils, and by the European operating sector. Traditionally, due to seasonality effects and partially because of disruptive grain deal operations, contribution to the revenue from grain growing segment was low, 4% only. Let's have a closer look at each business segment and results on our next slide. And here I pass my word to Victoria.

Victoria, it seems like you're on mute.