MHP SE

Ladies and gentlemen, thank you for standing by. And I'd like to welcome you to MHP's Q2 and six months 2025 results conference call on the 12th of September, 2025. At this time, all participant lines are in listen-only mode. The format of the call today is a presentation which will be followed by a question and answer session. So without further ado, I'd like to pass the line to Anastasia Sobotchuk, Director of Investor Relations. Please go ahead.

Thank you very much. Dear stakeholders, good day to you. Thank you for joining us for MHP's conference call dedicated to our second quote in semi-annual results. My name is Anastasia. I'm IR Director. I'm joined today by Victoria Kapelushna, Chief Financial Officer of MHP. Together, we will present and discuss the company's financial and operational performance for the reporting period. Please note that today's discussion is based on the press release, investor presentation, and financial statements. released earlier today. In addition, during our discussion, we will share our outlook and strategic plans, which reflects current assumptions as well as domestic and international market trends. We kindly ask you to take this context into account during the call. We move to the slide number three of the presentation. A few words, first of all, about macroenvironment in the first half of 2025. Despite challenging environment, including ongoing missile attacks and critical infrastructure, Ukraine's economy demonstrated notable resilience in the first half of the year. According to official data, Ukraine's real GDP grew by an estimated 1.3-1.5% year-on-year, driven by recovery in industry and construction, but constrained by war-related disruptions, energy shortages and labor challenges. Looking ahead, the National Bank of Ukraine projects further recovery with GDP expected to grow by approximately 2% this year. Inflation trends have also shown some moderation. The central bank currently forecast anticipated inflation for the full year to reach approximately 10%. Since October 3, 2023, the National Bank has adopted a managed exchange rate regime introducing more flexibility into the foreign exchange market, which remains in place today. The exchange rate remains highly sensitive to global geopolitical developments, including shifts in international trade and tariff policies. In 2025, Ukraine is expected to harvest over 23 million hectares of agricultural land, with roughly half allocated to grain crops and nearly 40% to oilseeds. Recent public forecasts suggest that after 2024 harvest of about 71 to 75 million tons of grains and oilseeds, Ukraine's 2025 harvest is likely to decline modestly under many scenarios, mainly projecting 73 to 74 million tons. Though more optimistic outlook see potential to reach 83 million tons if conditions improve. In summary, all these macro indicators collectively highlight both the resilience and the potential of Ukraine's economy as it continues to navigate complex and evolving environment. Let's move on slide number four of the presentation. So returning now to our financial performance for the first half of 2025, the main points are following. Revenue growth around 1.6 billion US dollars with 10% increase year on year. We have stronger performance in poultry, agriculture and European segments through revenue growth in both Q2 and six months 2025, offsetting the decline in vegetable oil sales Vegetable oil weakness continued. This segment continued to underperform, dragging down profitability, but its impact was offset by growth in other core segments, as mentioned. Growth profit stability, approximately $368 million in the first half of 2025. While vegetable oil margins declined, this was largely balanced by stable or improved results in poultry and agriculture. resulting in broadly stable Q2 or slightly lower six-month gross profit. EBITDA and operating profit decline. EBITDA, a net of FRS-16 decreased by 11% to approximately $236 million, and operating profit decreased by 29% to $136 million, mainly due to higher payroll related SG&A expenses increased depreciation and additional war-related costs. Net profit growth despite operational decline. Net profit increased in both periods by 67% to US$75 million in the first half of 2025 thanks to foreign exchange gain, reserving a significant FX loss in the prior year caused by grivna depreciation. Let's move to slide number five of the presentation. Here we have financial results by segment. And in the first half of 2025, the poultry and related operations segments remained the largest contributor to the company's performance, accounting for 55% of total revenue and 70% of total EBITDA. This was primarily driven by an increase in poultry prices. Main trigger for adjusted EBITDA in six months 2025 were actually triggers. We have a few. The growth in policy prices, however, partially affected by higher production costs and lower sales volumes for exports. Significantly higher production cost of sunflower oil driven by higher prices of sunflower and increased SG&A costs. Let us now take a closer look at the performance of each business segment. And I pass my word to Victoria.

Thank you, Anastasia. Good afternoon, everyone. Let's have a look at poultry and related operations segment performance, slide number six. Despite ongoing challenges of the war in Ukraine, MHP delivered strong performance in Q2 and H1 2025 exceeding results of the same period last year. This was driven by stronger poultry and processed meat prices together with effective cost management demonstrating the company's resilience and efficiency in operations. Poultry costs continue to increase in H1 primarily due to the higher grain prices and regular salary review, and it is market-adjusted in spring. Looking ahead, we expect additional pressure from energy, payroll expenses, and broader inflation impact on production inputs in Ukraine. Faulty prices continue to rise in Q2 and H1, both on export and domestic markets, up 16% year-on-year, compensating growth of poultry production costs. Volatility in commodity prices remains a key challenge for MHP. To mitigate this impact, MHP strategically continues growing its share of non-commodity products, both in Ukraine and export markets. In H1, we further prioritized sale of processed meat products with a focus on delivering the strongest returns. If you worked about our vegetable oil segment, slide number seven, performance in the segment remained weak with revenue decrease in Q2 by 13% year-on-year and 12% quarter-on-quarter driven by substantial decrease in sunflower oil sales year-on-year. EBDA for both H1 and Q2 declined year-on-year. However, results stabilized quarter-on-quarter, supposed by slightly better margin. To mitigate negative effect on group result, we have already adjusted our fodder receipt, shifting substantially from sunflower to soy cake. This result in higher soybean oil output. while sunflower oil production continued decreasing correspondingly. This pressure in profitability mainly reflected higher sunflower and soybean prices, which are not fully offset by oil prices changes. This was driven by a low harvest year in 2024 and increased number of crushing capacity in Ukraine. As a result, we expect this segment to deliver low profitability this year. Let's move to slide number eight, agricultural operations. Slightly higher segment revenue in H1 was a result from increased prices partially offset by the lower volume of grains sold to external customers from the last year harvest. ABD of agricultural operations segment remained almost unexchanged. The result was mainly the offset of high prices with mixed yields and slightly increased production costs. Spring crops harvesting has already started and is progressing well. As of today, we anticipate the yield of spring crops to be comparable to the last year. I would like to mention that only harvest of wheat was higher, over the seven tons per hectare, while the yield was slightly lower than prior year with 3.3 tons per hectare. 2025 harvest is expected to be between 1.2 and 2.1 million tons of crops. Let's proceed to slide number nine. several words about European operating segment. EVD of European operating segment was broadly stable year-on-year in both in H1 and Q2, however improved compared to the previous quarter. This growth was supported by higher sales of poultry meat in Slovenia, in Croatia as well, and other export markets. along with modest price increasing in Q2. Slide number 10, a few words about cash flow and liquidity position. Cash from operations before changes in working capital amount 180 million in H1 and 80 million in Q2, broadly in line with last year. Investment in working capital amount 19 million during the first half of the year, pretty stable year on year, primarily due to the increase in trade account receivables driven by high mint prices and changing inventories, agricultural produce and biological assets were largely seasonal and tended to offset each other. CAPEX. $134 million in H1 remained stable year-on-year and was directed to several key areas, including extensive maintenance and modernization of existing facilities, plus cost optimization project, also expansion and improving of Pyrut-Ninabtu production facility, and construction of new bioenergy production facilities. As you already know, on 31st of July, subsequent to the reporting date, the group finalized the acquisition on 92% of the shares capital of UESA Group, one of the leading Spanish producers of poultry meat and animal feed. The total consideration for the transaction amount of 171 million euros Approximately 70% of this amount was financed through that facility from private European banks, while the remainder was funded from the group on resources. Uvesa Group is one of the leaders in the food industry in Spain and one of the leading poultry producers in Spain. The group operates in four feed mills, one hatchery, and four poultry slaughterhouse and two pork farms. Besides the 2024 result, the group produced over 150,000 tons of poultry and over 70,000 tons of pork generate over 600 million euro of revenue. Regarding debt position, At the end of the period, the company's total debt was nearly $1.7 billion and net debt about $1.2 billion. The liquidity position at the end was $330 million in cash, $154 million of which was held by the group subsidiary outside Ukraine. As of June 2025, Group's leverage ratio was 2.3. Regarding 550 million notes due in April 26, this is a top priority for us, and we fully understand its importance to investors. As of 30 June, They have not been reclassified from long-term to short-term debt. There have been no material changes in Ukrainian capital control or liquidity regulation, which requires that foreign currency proceeds from exports originated in Ukraine be repatriated with 120-180 days. This in practice limit our ability to use offshore cash for debt repayment. While MHP can service its existing loan portfolio and bonds from Ukraine, principal repayment from offshore remain restricted. We continue to operate under uncertainties and challenges due to the ongoing war. With the node's maturity in approximately seven months, we are actively evaluating all available options and remain confident in our ability to implement an effective repayment strategy. We certainly appreciate the support from our investors since February 2022, and look forward to continue our constructive cooperation. And now I give the floor to Anastasia.