MHP SE

Ladies and gentlemen, thank you for standing by. And I'd like to welcome you to MHP's third quarter and nine months 2025 results conference call on the 15th of December, 2025. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation 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, madam.

Thank you very much. Good day to you. Thank you for joining us for MHP's conference call dedicated to our third quarter and nine months results. I'm Anastasia and 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 reflect 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 on to slide number three of the presentation. Just a second. My slides do not move. Yeah, I can move the slides now. Perfect. So, a few words about the macro environment in the reporting period. Despite challenging environment, including ongoing missile attacks on critical infrastructure, Ukraine's economy continues to demonstrate resilience in the third quarter of the year. Ukraine's GDP expanded by 2% year-on-year in the third quarter of 2025, according to preliminary national statistics, reflecting continued economic resilience despite ongoing challenges. The economy continues to contend with substantial headwinds related to the conflict, including damage to critical infrastructure, particular energy systems, labor shortages due to mobilization and displacement, and broader disruptions to trading investment, which have constrained growth and increased uncertainty in Ukraine. Looking ahead, the National Bank of Ukraine projects GDP to grow by 2% in 2025. Inflation trends have also shown some moderation, as you can see on the diagram. The National Bank's current forecast anticipates inflation for the full year to reach 9%, approximately 3 points lower than in 2024, with a projected further decline to around 7% in 2026. Since October 3, 2023, the National Bank has adopted a managed exchange rate regime, which is actually in place today. The exchange rate remains highly sensitive to global geopolitical developments, including shifts in international trade and tariff policies. In 2025 harvest season, Ukraine's agricultural sector delivered a substantial output despite ongoing war-related operational challenges and adverse weather conditions during summertime. Early official data and industry estimates indicate that farmers are on track to collect significant volumes across major commodity groups, including grains, corn and oilseeds. Deputy officials have projected that Ukraine could harvest around 52 million tons of early grains and approximately 21 million tons of oilseeds. broadly in line with 2024 results. Overall, the total harvest of grain and oilseed crops for 2025 is expected to be in the range of about 70-75 million tons. Despite logistic and security constraints linked to the war, Ukraine farmers continued operations across major agricultural regions, underscoring the resilience of the country's agri-food sector and its critical contribution to both domestic food security and international markets. In summary, all these macro indicators collectively highlight border resilience and the potential of Ukraine's economy as it continues to navigate complex and evolving environment. We move on slide number four of the presentation. Just give me a second. Yep, we're here. Let's look at the financial performance for the reporting period. And the main points are following. First of all, it's revenue growth. In Q3 2025, revenue increased by 29% year-on-year to approximately $1 billion, while in nine months 2025, it increased by 16%. year-on-year to over $2.6 billion. And it increased by 17% quota on quota. This strong performance in Q3 2025 both in revenue and EBITDA is driven by strong results in poultry, agricultural and the European operating segments, reflecting especially an integration of Uvesa, the Spanish company, which MHP acquired this summer into consolidated results of the group. Second point is the adjusted EBITDA, net of FRS 16 gross. In Q3 2025, EBITDA increased by 27% to over 200 million US dollars. While in nine months, 2025, it increased by 4%. I would say it remained relatively stable year on year and reached $455 million. And actually EBITDA also increased by 75% quarter on quarter. Strong results in nine months, 2025, is driven by factors reflecting Q3 2025 trends. However EBITDA increased slightly, experiencing pressure on profitability from higher payroll costs, SG&A costs and increased war-related expenses. Let us move on to slide number 5 and we will look at the financial results by segments. In the nine months of 2025, poultry-related operation segments remained the largest contributor to the company's performance, accounting for 53% of total revenue and 53% of EBITDA. This was primarily driven by an increase in poultry prices, however partially offset by poultry production costs and slightly lower poultry sales volume. Agricultural operations were the second biggest contributor to the group's EBITDA, driven by good harvest, especially for winter crops. I'm talking about wheat in this case especially. And growing prices for crops both in Ukraine and internationally. Main triggers for adjusted EBITDA growth in nine months 2025 were an increase in poultry prices, However, partially upset by poultry production costs and slightly lower poultry sales volumes, good harvest and strong crop prices, as I mentioned earlier, and integration of U.S.S. financial results, as well as slightly higher sales volumes of poultry and brought us meat products at Piratnina Ptui with stable pricing environment. Let us now take a closer look at the performance of each business segment And here I pass my word to Victoria.

Thank you, Anastasia. Good afternoon, everyone. Let's have a look at policy and related operations segment performance, slide number six. Despite our ongoing challenges of the war in Ukraine, MHP delivered solid performance in Q3 and nine months, with as a result exceeding those 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 both in nine months and Q3 increased year to year, primarily due to the higher grain prices, payroll, and utilities prices. Poultry price was in nine months and Q3 increased year-on-year, while remains stable quarter-on-quarter, mainly compensated for increased production costs during the last period. Commodity price volatility remains a key challenge for MHP. To mitigate this, we strategically shifting towards to higher margin value-added products. This transaction requires ongoing investment innovation, product development, and market expansion. Our team remains fully committed to the transformation. We support both margin, resilience, and long-term growth. We can also see an increase in sales volume of processed meat products in Q3. We further prioritized sales of processed products focusing on those delivering the strongest returns. If you want about our vegetable oil segment, slide number seven, performance in the segment remained weak, with EBITDA for both nine months and Q3 decline year-on-year. However, results stabilized quarter-on-quarter, supported by slightly better margins. The pressure mainly reflected higher sunflower and soybean seed price, which were not fully offset by oil price changes. The increase in seed price was driven by lower harvest yield in 2024 and increased crushing capacity in Ukraine. During the nine months, Ukrainian vegetable oil producers continued processing seeds carried over from the 24 seasons. To mitigate the negative effect on group results in 2025, we have adjusted our fodder receipt, shifting from sunflower cake to milk. This resulted in higher soybean oil output, while sunflower oil production decreased correspondingly. We expect profit to increase slightly in next year, driven by high production volume of sunflower oil and rising price for both sunflower and soybean oil. Let's move to slide number eight, agricultural operations. As of the early December, MHP harvested more than 330,000 hectares Representing over 90% of the land under cultivation for the 2025 season and collected in excess of 2 million tons of crops, wheat reached a record high of 7.7 tons per hectare compared to the 7.2 tons per hectare last year. while rapeseed yield was slightly below the priority here at 3.3 ton per hectare compared to the 3.7 ton last year. As of today, forecast corn yield is estimated at 8.7 ton per hectare, which sunflower yield projected at approximately 3 ton per hectare. As of today, we anticipate spring crop yields to be broadly comparable to the last year. The overall harvest is expected to total between 2.0 to 2.2 million tons. The harvesting of the winter crops has been completed. Segment revenue remained unchanged as higher price across most crops and increased sales volume of soybean and wheat offset the decline in volumes of corn and rapeseed. EBD of agricultural operation segment improved significantly, driven by higher price of grain and oilseeds. Let's proceed to the slide number nine. several words about European operation segment. Following the acquisition completed on 31 of July 2025, U.S. results have been fully consolidated into European operation segment. In the first two months post acquisition, U.S. generate revenue 126 million U.S. dollars. and EBDA $9 million. The results together, which increase sales volume and stronger price at Perutni-Naptui, contribute to 18% year-on-year increase in the segment EBDA for nine months. Slide number 10, a few words about our cash flow and liquidity position. Cash from operations before changes in working capital amounts $313 million this year and $132 million in Q3 both exceeded last year's levels. Release of working capital $46 million in nine months In contrast to the investment recorded in nine months, 2024, this release was mainly driver by, first of all, consumption of core soybean stock purchasing in 2024 and settlement of recoverable VAT. CAPEX in both nine months this year and Q3 slightly decreased. and was directed to several key areas, include extensive maintenance and modernization of existing facilities, the expansion on international poultry operations, the construction of new bioenergy production facility, and also compliance standard and margin improvement initiatives. As you already know, On 31st of July, the group analyzed the acquisition of 92% of the share capital of Uvesa Group, a leading Spanish producer of poultry and pork meat and animal feed. The total consideration for transaction amount to $312 million. Approximately 80% of this amount was financed through debt facilities from private European banks while the reminder was founded from the group's own resources. Total identifiable net assets amounted to $183 million with goodwill arising on acquisition $44 million. Regarding debt, At the end of the period, the company total debt was nearly $1.1 billion and net debt about $1.5 billion. The liquidity position at the end of Q3 was $463 million in cash. Only $185 million of which was held by the group subsidiaries outside in Ukraine. At the 3rd of September, the group's leverage ratio was 2.6 below the defined limit, 3.0. Proforma leverage ratio calculated as if the U.S. acquisition had occurred on the 1st of October 2024 amounted to 2.4. With respect to the 550 million notes due in April 2026, this matter remains a top priority for companies and we fully recognize its importance to investors. By the end of September, the notes have been reclassified from long-term to short-term debt There have been no recent changes to Ukrainian capital controls of liquidity regulation, which require foreign currency proceeds from exports originated in Ukraine to be repatriated with 120-180 days. In practice, these requirements limit the company's ability to utilize offshore cash for debt repayment. While MHP is able to service its existing loan portfolio and bond obligations from Ukraine, there are no restrictions on coupon payment. The repayment of principal from offshore entities remains restricted. We continue to operate under uncertainties and challenges due to the ongoing war with maturity in approximately four months, we are actively evaluating all available options and to remain confident in our ability to implement an effective repayment strategy. We sincerely appreciate the support from our investors since the beginning of the war in Ukraine and look forward to continue our constructive cooperation. And now I give the floor to Anastasia.