MHP SE

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to MHP's Q1 2026 Results Conference Call on the 16th of June 2026. At this time, all participants' lines are in listen-only mode. The format of the call is a presentation which will be followed by a question and answer session. So, without further ado, I would like to pass the line to Anastasia Sobotiuk, Director of Investor Relations. Please go ahead, madam.

Thank you, Daniel. Dear stakeholders, good day, and thank you for joining MHP's conference call covering our first quarter 2026 results. My name is Anastasia, Investor Relations Director, and I'm joined today by Viktoria Petelyushina, CFO of MHP. Together, we will present and discuss the company's operational and financial performance for the reporting period. Please note that today's discussion is based on the press release, financial statements, and investor presentations published earlier today. During the call, we may also discuss our outlook, strategic priorities, and future plans. These statements are based on our current expectations, assumptions, and assessments of market conditions, and are therefore subject to risks and assurances. We encourage you to consider these factors when evaluating the information presented today. With that, let us begin. We go on slide number three of the presentation. Before turning to our operational results, let me briefly comment on the market economic environment in Ukraine. The Ukrainian economy continues to demonstrate resilience despite the ongoing war. Following the recovery in 2023-24, GDP growth remained positive in 2035, although the outlook for 2026 has been revised downward due to continued infrastructure damage, energy challenges, and labor shortages. Inflation accelerated during the first quarter, reaching almost 15% year-on-year in March 2025, driven primarily by high food and energy prices. The national bank expects inflation to gradually moderate over the medium term. The local currency, Ukrainian hryvnia, remains broadly stable, supported by the national bank, active management of foreign exchange market, with only a gradual depreciation expected going forward. Importantly for our sector, Ukraine's agricultural industry remains resilient. The 2035 harvest was stable despite challenging conditions, remember that, providing a solid foundation for agricultural exports and food production. In addition, the 2026 sowing campaign has been successfully completed, with planting progressing largely in line with expectations, despite the ongoing wartime environment supporting as prospects for the upcoming harvest. Overall, while the operating environment remains challenging, the macroeconomic stability has been maintained and we continue to successfully adapt our business to the evolving conditions. With that, let me move to our operational and financial performance for the quarter. We are moving to slide number four of the presentation. Turning to our financial performance, Q1, 2026 revenue increased by 31% year-on-year 1 billion U.S. dollars, primarily driven by the consolidation of U.S. and continued growth of our European operations. Gross profit remained probably stable at 162 million U.S. dollars, as stronger contributions from our European business largely upset margin pressure in the policy segment. Adjusted EBITDA, excluding FRS-16, amounted to $79 million compared with $111 million in Q1 2025. EBITDA margin was 8%, reflecting softer policy market conditions, low profitability in agricultural business due to seasonal factors, and the initial impact of integrating of URSA. Net profit was negative, $85 million, mainly due to foreign exchange losses compared with gains in the prior year period. Looking at our exports mix, poultry products remained the largest contributor, while grain exports increased year-on-year, reflecting continued diversification of our revenue streams. Overall, while profitability was affected by market conditions and integration-related factors during the quarter, our revenue growth demonstrated the benefits of geographic diversification and the strategic expansion of our European platform. Let me now provide more detail on the performance of our key business segments. Slide number five of the presentation. Looking at our segment performance, the business continues to benefit from increased diversification with Europe contributing 35% of revenue and over half of segment EBITDA during the quarter. The poultry segment remained our largest revenue contributor, generating 453 million US dollars in revenue. However, EBITDA declined year on year due to weaker poultry prices, lower sales volumes, and higher production costs, resulting in EBITDA contribution The European operating segment delivered a strong performance, contributing $354 million in revenue and $42 million in data. The inclusion of EUSA had a positive impact on bonds' revenue and earnings and further strengthens our presence in key European markets. Overall, while the poultry segment faced a more challenging market environment, The growing contribution from our European operations and the successful integration of USM helps support the group's overall performance and demonstrates the benefits of our diversification strategy. Let us now turn to the operational highlights across our key business segments, and here I pass my word to Victoria.

Thank you, Anastasia. Good afternoon, everyone. Let's turn to poultry and related operation segment performance. Slide number 6. Despite more challenging pricing environment in exports, poultry market during the Q1 MHP remained focused on operational discipline, with results reflecting the temporary impact of softer export prices. Total poultry meat sales volume declined slightly year-on-year to 152,000 tons as reduced shipment to MENA were not fully offset by high exports to Europe. Processed meat volumes continued to grow, increased by 14,000 tons, supported by high production and our ongoing shift toward add-value products. Revenue for Q1 increased modestly year-on-year to $153 million, driven by stronger pricing and higher volumes of processed meat, alongside a significant increase in complementary products and other revenue, including biogas. On the same basis, revenue declined $524 million in Q4 2025, reflecting softer pricing for poultry meat on export markets. Gross profit decreased year-on-year to $60 million primarily due to a low IFRS 41 biological asset valuation gain compared to the prior year period and higher production costs. Decline comparing to Q4 last year reflected the continuous deterioration in Europe export meat prices and that carried through into Q1 2026. Adjusted BDA, net IFRS 16, decreased year-on-year to $19 million, driven by low gross profit and higher delivering and transportation expenses. The quarter-on-quarter decline was driven by low gross profit, while selling general and administrative expenses remained stable compared with Q4 2025. False price on export markets continued to decline in Q1, however, stabilized and showed positive dynamics in April-May. Looking ahead into 2026, we expect the overall cost and price environment to remain challenging, but current pricing gives us reason for cautious optimism as we move through the year. Turning to our vegetable oil segment, slide number 7. Revenue in Q1 remained probably unchanging year on year at $116 million, but increased significantly at the same period from $81 million in Q4 2025. Reflecting recovery in sales volume and price appreciation across Boston, Florida, and soybean oil. Sunflower oil sales volume recovered to almost the level in Q1 2025 and increased quota on quota, supported by launch of new sunflower extraction line, which increase oil yield and expand overall protein capacity. Soybean oil sales volume continued to decline both year on year and quarter on quarter, mainly due to the high international consumption of soybean oil and the fit recipe and the absence of tool manufacturing arrangement in Q1. Adjustment of BDA slightly improved to 3 million, reflecting the combined effect of volume recovery and favorable commodity prices. Looking in 2026, We expect some improvement in segment profitability, supported by gradual normalization of the raw material cost environment and high production volume. However, the pace of recovery will depend on commodity market dynamics and we remain cautious in our expectations for the near term. Let's move to the slide number 8, Agricultural Operations. Revenue increased to $99 million, driven by higher price across key crops, together with increase of volume of corn and soybean to source party, which more than upset low wheat sales volume. Adjusted to BDA, net IFRS 16 increased to $39 million, supported by higher price of winter crops, wheat and hay seeds. Both winter and spring sowing campaigns have been full complete. The crop stands are in good condition and cross the group farming area. Fareable weather patterns and adequate perception of now support the outlook for crop yield at least in line with 25 levels. Looking ahead to 2026, we expect agriculture to continue delivering positive results, supported by affordable crop price and yield forecast, even as the fuel costs rise, helping upset lower debt in our poultry operation and stabilizing contribution to total EBITDA. Let's proceed to the slide number 9. Several words about European operating segment. Revenue increased year-to-year to $354 million, driven by consolidation of UESA, while decreasing slightly quarter-on-quarter as outbreak of African swine fever in Spain put downward pressure on pork prices. Poultry meat sales volume grew year-on-year, driven by high sales in both domestic and export markets, while processed meat volume remained stable. Average price for both poultry and processed meat held steady both year-on-year and quarter-on-quarter. Gross profit increased year-on-year to $65 million, mainly due to the U.S. effect, while the quarter-on-quarter increase was related to favorable IFRS 41 fair value movement, reflective partial recovering of peak price in Spain in March and April. Adjusted to the date, net IFRS 16 also grew, broadly in line with development of gross profit. Looking ahead to the remainder of 2026, we expect price for poultry and pros meat in the European operating segment to remain broadly stable, with sales volume continuing to grow. This is expected to support steady growth in adjusted EBITDA net FRS 16 over the course of the year. Slide number 10. A few words about our cash flow, debt, and liquidity. Operating cash flow for Q1 decreased year-on-year to $14 million, driven by low cash earnings, mainly reflecting negative trends in extra fortune and prices. Working capital representing an investment of only $20 million in Q1 2026 primarily driven by investment in inventory and crop fields ahead of sowing campaigns, partially offset by consumption of agricultural produce harvest in 2025 and increase in payables. The investment was lower than Q1 last year, which had reflected one-off increase in receivables last year. Capital decreased to $43 million with capital development mainly across key strategic areas focused on the maintenance and modernization of existing facilities. Regarding debt, the increase in long-term debt and reduction in short-term debt reflected the repayment of $550 million senior notes due to 2026, and the issues of the new Eurobond 550 due 2029. Cash position was around 518 million as of 1 March 2026. By the end of the first quarter, the group compliant with all banks' covenant, the group's acquisition leverage ratio increased to 2.6, below the defined limit 3.0 compared to the 2.5 by the end of last year. A few words about subsequent events. Subsequent to the reporting date, the group entered into the Share Purchase Agreement for acquisition of stake of 100% in Nisiakos, the leading vertical integrated poultry producer in Greece. The transaction is structured in three tranches, through which the group will acquire 70% of share capital. with source completion expected in the first quarter of 2027, subject to customary closing conditions, including regulatory clearance. The group has also granted the existing shareholders a put option of the remaining 30% accessible between 2030 and 2035. Yes. As previously disclosed, the consideration for the acquisition is based on a pre-agreed valuation methodology linked to the target's enterprise's value and financial performance, subject to customary adjustments for cash, debt, and voting capital. In line with our announcement, the amount payable at each stage of the transaction will be disclosed at the relevant time. And now I give the floor to Anastasia.