MHP (MHPC) Q1 2024 earnings summary

Executive summary

• Q1 2024 revenue declined 4% year-over-year to $719–$720 million, with export revenue comprising 63% of total.

• Adjusted EBITDA remained stable at $119 million, with a 17% margin; net profit dropped 67% year-over-year to $16 million, mainly due to a $40 million foreign exchange loss from Hryvnia depreciation.

• Operations remained resilient despite ongoing war in Ukraine, frequent infrastructure attacks, and logistical challenges, especially for exports to the EU.

• Gross profit increased 18% to $170 million, driven by higher poultry segment profits and revaluation of biological assets.

• No dividend declared for 2023 or Q1 2024 due to ongoing uncertainties and liquidity preservation.

Financial highlights

• Gross profit was $170 million (24% margin), up from $144 million (19% margin) year-over-year.

• War-related expenses rose 67% year-over-year to $10 million.

• Cash flow from operations before working capital changes was $90 million, with CapEx at $57–$60 million in Q1 2024.

• Net debt stood at $1.1–$1.12 billion, with total debt at $1.5–$1.53 billion at quarter-end; net debt/EBITDA ratio at 2.51x.

• Liquidity at quarter-end was $390 million in cash, with $217–$280 million held outside Ukraine.

Outlook and guidance

• Full-year 2024 EBITDA is projected around $400 million, with 25% from Perutnina; CapEx guidance is $300 million+, about one-third from Perutnina.

• Management believes the Group has adequate resources to continue operations, but material uncertainty remains due to the unpredictable effects of the ongoing war.

• CapEx expected to normalize to around $250 million in future years as expansion projects complete.

• No significant working capital investments expected in 2024, except potential VAT reimbursement delays.

• International poultry prices expected to trend downward, with some stability in Ukraine; grain markets remain volatile with downward price trends.