Ukraine’s largest poultry producer, MHP, generated a net loss of US$89 million in the first half of 2022 compared to a net profit of US$232 million in the first half of 2021, the company said in a statement.
The negative financial performance dynamics stem primarily from a US$92 million non-cash foreign exchange loss in the first half of 2022. The continuing military conflict in the country also continues to hurt operations.
MHP reported that the conflict in Ukraine has stabilised to some extent, although the situation remains highly fluid, and the outlook is subject to extraordinary uncertainty.
Although MHP continues to face complex challenges and disruptions in operations, sales and logistics, the company said it was able to restore poultry production in its Ukrainian facilities to almost 100% capacity.
In the first half of 2022, MHP estimated its production of poultry in Ukraine decreased by 3% against the same period of the previous year to 346,039 tonnes. The European division saw an 11% rise in poultry production year-over-year to 59,809 tonnes, the company said.
“New albeit more complex and costly logistics routes have been established in recent months, and export volumes are increasing. We expect to complete the grain harvest on virtually all our land in the second half of the year,” MHP said.
Thanks to the agreement signed on 22 July by Ukraine, Russia, Turkey and the United Nations to resume grain exports, agricultural companies are now able to export from Ukraine, and more than 100 ships have delivered animal feed, grain and vegetable oils to several MENA and EU countries. MHP is planning to use this route to export grain later this year.
MHP has not suffered any material damage to its facilities, infrastructure and production in Ukraine except for the destruction of a leased storage facility, which incurred a US$6 million loss of products in March, and the suspension of Ukrainian Bacon operations in the Donetsk region which have now been relocated to other locations in Ukraine.
However, MHP has suffered substantial war-related costs since the Russian invasion on 24 February. In the first half of 2022, these amounted to almost US$50 million and included community support donations, write-off of inventories and biological assets and other war-related expenses.
“Working with volunteers, MHP has provided humanitarian aid including free supply of around 13,000 tonnes of poultry products to the population of Ukraine since the beginning of the war,” MHP said.