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.

Thank you very much, Victoria. Let me conclude the presentation before we start our Q&A session. Despite highly uncertain and volatile operating environment, which you also mentioned, marked by ongoing war in Ukraine, fluctuating export markets, conditions from poultry instability in grain and vegetable oil prices, MHP continues to demonstrate operational resilience and we can all see this resilience in our financial and operational results. The company not only sustains core business activities under persistent disruptions but also versus strategic growth and is becoming an international company as reflected in the acquisition of Uvesa in Spain. As the company approaches the bond 2026 refinancing milestone, it remains focused on prudent financial management, even as capital controls by the NBU remains unchanged, as Victoria has just mentioned. In a landscape lacking clarity on ceasefire or peace negotiations, MHP adapts, innovates, and positions itself to navigate near-term headwinds while building the long-term strength. DSD holders, let us take your questions now. Thank you very much. Operator?

Thank you very much. We'll now move to the Q&A part of the call. If you'd like to ask a question, please press star 2 if you're connected from the phone. That is star 2 if you're connected from the phone. And if you're connected from the web, you can type your question in the box provided or request to ask a voice question. We'll give it a few moments for the questions to come in. Also, just a kind note that we will take the voice questions during the call. And after the call, the MHPIR team will get back to you on your written questions. Okay, so our first question is from Anton Unkist from Knighthead Capital Management. Your line is now open. Please go ahead.

Good afternoon, guys. Thanks so much for taking the questions. The first one is a clarification. Slide 5 shows a $13 million positive impact from Uvesa on year-over-year EBITDA performance, but slide 9 shows $9 million. So which number is correct? Part of the reason I'm asking is I'm trying to understand what's happening with Pirutnina. Because if Uvesa was 13, then it sounds like Pirutnina is down year on year. But if Uvesa was 9 million, then Pirutnina is up slightly over a year. So if you could clarify that, that would be great.

Do you follow that? Just give us a second. We will open two slides, right? And we'll come back to you in a minute.

Okay. Yes. And then... My next question is just any early thoughts on 26 guidance, or at least as you think about the refinancing of the 2026 bonds, do you expect to be free cash flow positive between now and the maturity of the bonds?

Anton, sorry, I will come back to the, thank you for your question. I will come back to, maybe I did not catch exactly your question, because if you look at in the slide nine, We see the better financial result in the BDA in European 13. I see it is not U.S. effect. U.S. effect only $9 million. $4 million is effect from Pirutnina. Total better financial result in European perimeter segment, $13 million. $9 million of them just U.S.

Got it. The other four is Pirutnina. So Pirutnina grew as well. That's good.

Yes, and please repeat the second question.

So, yeah, any early thoughts on 26, you know, high-level, you know, production, maybe EBITDA, CapEx, and a related question, do you expect to be generating cash between now and the bottom?

Yeah, thank you. Yeah, thank you. Thank you, Antonio. Yeah, thank you. As you understand, unfortunately or fortunately, in Ukraine, during the last 10 years, we have been working at 100% capacity utilization. We cannot produce more in our current capacity. As a main driver for increasing our European operations, and yes, we understand the biggest increasing we expect from U.S.A., from our new company in our family, yeah, and we understand how we can increase sales volume there and how we improve efficiency and cost optimization, yeah. And if you ask me about, yes, our expectation about total EBDA because, you know, unfortunately MHP is remain is not just a non-commodity company. We continue to produce 50% of total commodities, and that is why our business correlates with prices. But we expect that our total EBITDA for next year will be very similar with this year. It will be around $580-600 million. And regarding cash flow total, yes, so we expect that we will have positive cash flow, not so high, around maybe 30, 40, 50 million. But now we're considering our company as the two divisions, one of them in Ukraine division and the second European operations. In European operations, because we understand that we need to invest money in the U.S. to increase this business, we expect the negative cash flow. Well, cash flow at the same time in Ukraine, we expect positive cash flow. It is a total of the expectation for the next year.

Okay, very helpful.

Thank you. Okay.

Okay, thank you. Our next question is from Stella Cridge from Barclays. Your line is not open. Please go ahead.

Hi there. Afternoon all. Many thanks for all of the updates. I wanted to ask a couple of areas. I wondered, in terms of the first four months that you've been consolidating Uvesa, you touched on it briefly already. In your first year in 2026 of owning the asset, what are the main kind of targets or things you're going to look at to try to improve performance there, that would be great. And also just on the prior question, I'm sorry if I missed it there, what you expect CapEx to be for the whole group next year and kind of the main projects that you're looking at. And then finally, I understand that you've been talking with investors recently about the bond. I was wondering, you know, what kind of feedback you got from that experience, what kind of options might be possible for What do you think potential you could go up to, say, on coupons in a new bond or any kind of cash component? It'd be great to get some feedback from those discussions with investors.

Thanks a lot. Okay. Thank you for your question. We will be nice to everyone. The first question, if you ask me about pro forma for 2026, is I've mentioned... Just a few minutes ago, we see the big potential for growth in the U.S., and we understand how to improve cost of production. We understand how we can increase sales volume there, and our estimation about increasing EBD in the U.S. is approximately by 25-30% year-to-year. Total capex of the group. Yeah, total capex around 250. But what I would like to emphasize, our maintenance capex, because we are a big company, with revenue $4 billion plus, with EBITDA 500, 600. And that is why, yes, our total maintenance capex today around 130. If you 130, 150, take into account Ukrainian operations and European operations. and plus additional 100 million copies which correlate mostly with our European operations and our project, non-commodity project in Ukraine. Yes, feedback from, yeah, as I told during the presentation, our priority number one, it is our, issue with euro bond 2020 2026 i think yeah we understand that only in four months and we try to find to the best how to say to the best solution for for companies for bondholders for investors And I think that all, because all our strategy, all our history, MHP always demonstrate very good, strong, not just strong performance and strong trade records. And all of, during the whole history, we were the most reliable partners for all our creditors. And we would like to be the same.

Thank you very much for those comments. If I could also ask as well, I noticed in the short-term borrowings, there's $318 million of other short-term borrowings. Could you just run through the breakdown there and how you also plan to address those?

If you speak about the short-term borrowings, it is a part of the PXF financing because you know that we have the huge crush on businesses. And part is for financing working capital, the same is in Ukraine and in Turkey. Super, thank you for that. Thank you.

Thank you very much. We'd just like to give you a reminder that if you're connected from the phone and you'd like to ask a question, it's star two. And if you're connected from the web, you can send your written or request to ask a voice question. Our next question is from Dimitri Ivanov from Jefferies. Your line is now open. Please go ahead. Hello, Dimitri, your line is not open. We cannot hear you.

Okay, now I think I can hear you. Thank you very much for the presentation. I just wanted to ask a few follow-up questions. You mentioned that you expect positive repercussions next year. We just discussed the Kytex expectations for you. Can you unpack the way you look at the poultry prices? Basically, we see material increase year over year in poultry prices. Basically, how do you see poultry prices evolving into 2026, given all the demand-supply balance? And also kind of also sub-question, basically, when it comes to your expectations for 2026, how should we look at the working capital? Because working capital was a positive inflow this year. Also kind of curious, when you expect positive cash flows, how do you look at the working capital impact for the next year? So this is my first question.

Hello? Can you hear me? Regarding the poultry price, yes, our expectation, you're completely right, this year the poultry price increased substantially, and we don't expect further increase in poultry price. Even in some region, if you're to be honest, in some region we put slightly lower than even current price. Because always at the beginning of the year, we try to be more conservative. And this was our budget always. For me, personally, it's more comfortable to be this very conservative budget. Yeah, it's much better to see the higher figures by the middle of the year compared to the budget. Yeah, because, yeah, we don't expect any increasing of poultry price. Regarding the second question about working capital, yes, if you look at our nine-month results, we have some release in working capital, but if you speak about the whole year, we expect that we will have some investment in working capital not very significant, around $20 million, $30 million, because we significantly increased price, and that is why trade receivables increased. Regarding next year, we don't expect any investment in working capital. Yeah, it is close to the zero. Thank you.

Understood. That's helpful. I also wanted to ask you about cash outside of Ukraine, which is around 185 million as of now. Are there any kind of restrictions like when it comes to this cash? So, for example, do you have just two hold like a minimum amount of cash in Spain or in Peru up to in Slovenia as part of the covenants with the bank so should we look at this cash as kind of available for any kind of debt management liability management exercise so there is some restrictions when it comes to offshore cash of 185

Yes, the equation, yes, you're completely right. Around $60 million of this amount is the amount on account U.S. and . Not the special restrictions regarding pledge of this cash. Yes, you're right, you're right. But the second question about what?

I mean, is it like, can you use this cash without any kind of restrictions? any consent from lenders just to use this cash. So basically it's freely available cash that can be used for like intergroup operations.

No, you're completely right. Yeah, you're completely right. The base of loan agreement, this company cannot pay, yes, cannot upstream as dividend to MHP. Yeah. Yeah, just just just UBS because UBS is a subsidy to Perutnino and Perutnino took acquisition for UBS and just impossible intercompany. Yeah.

That's helpful. And probably like one kind of clarification on like current capital control rules and etc. because you're kind of about to come to a potential agreement or a deal just to extend the bond or do something else with the bond. I'm just trying to understand, are there any restrictions on how much you can pay interest rates or any kind of limitations on the interest rate the company can offer to bondholders? For example, 10%, not more than 11% is...

No limitations. Accordingly, in Ukraine, the maximum interest rate from Ukraine outside is 12%. You're right. 12%.

12% is the maximum that can be offered to new owners. Interest rate. All in. Okay. That's clear. And final clarification, apologies. You mentioned that you expect free cash flow negative at the profile at Uvesa given CapEx and expansion CapEx. How do you plan to fund this negative cash flow? Is there additional loans?

expected to be yeah but it would it would not be very big amount it would be very yes yeah so it will be funded from loans not from ukrainian box perimeter right basically no no no from ukrainian books you understand that you cannot do it yeah we don't have any possibility to do it yeah just uh thank you for the clarification and for ukraine yeah from ukraine we have the priority number one is the issue with our Eurobond of 550 million.

Thank you very much. That's all for me.

Thank you very much. Just a reminder, it's star two if you're connected from the phone. If you're connected from the web, you can also ask a voice or send a written question. We'll just give it a few more moments for any further questions to come in. Okay, it looks like we have no further voice questions. I will now hand it back to the MHP team for the closing remarks.

Thank you. Can you hear me now? Yes, thank you. Thank you very much. Thank you for the meeting. Thank you for the questions. Of course, I understand that there are some questions which we didn't cover during our meeting. And of course, you are more than welcome to get in touch with me and we will cover those questions directly. Thank you and we'll stay in touch. Bye.

Thank you.

Thank you so much. That concludes the call for today. Bye-bye. Thank you. Have a nice day.