MHP discloses new plans on international expansion

By Vladislav Vorotnikov

- Last updated on GMT

MHP discloses new plans on international expansion

Related tags: Poultry

Ukraine poultry giant MHP intends to continue acquiring foreign poultry producers and processors, not only in the European Union (EU), but also in the Middle East and Africa, the company has said in a statement posted on the Warsaw Stock Exchange website.

By 2022, MHP should be able to commission the second stage of its Vinnitsa poultry farm with a planned production capacity of 260,000 tonnes (t) of broiler meat per year, the company said. The first production line in that stage has already started operating.

The upcoming expansion should increase MHP’s overall production capacity by 36%, from 618,000t in 2018 to 840,000t in 2022, said the company. MHP has already spent $232 million on business development and planned to spend $420m more between now and 2022, the company added.

This is the first time MHP has revealed plans to acquire poultry businesses in the Middle East and Africa. Over the past few years, the company has conducted takeovers of several poultry processors in the EU, including Slovenian poultry company Perutnina Ptuj in November 2018.

It is believed that MHP has been using its processing capacities in Europe to export more products duty-free to local markets. However, the company has not given any further details about the rationale behind the purchase of poultry businesses in the Middle East and Africa. 

"We are one of the fast-growing poultry producers in Europe and recently completed the strategic acquisition of Perutnina Ptuj, a well-established food processing business headquartered in Slovenia,”​ Anastasiya Sobotyuk, head of investor relations told GlobalMeatNews.

"This is MHP's first acquisition of this kind and creates a platform for growth in the EU to produce quality poultry meat at affordable prices. We are also considering other partnerships and acquisitions and are actively looking to expand in the Middle East. We believe our management expertise and business model of vertical integration can help grow production and boost sales in these key markets,”​ she added.

Limited opportunities on the home ground

Any further development in the Ukraine poultry industry would have to be secured almost entirely by exports, Sergey Karpenko, chairman of the Ukraine Association of Poultry Producers revealed last year.

Growth in poultry sales on the domestic market in Ukraine was unlikely, given that, over the past year, poultry consumption in the country had already significantly exceeded the recommended dietary allowance, according to a report released by the Ukraine Institute of Agrarian Economy (UIAE).

In 2018, poultry accounted for 48% of all meat consumption in Ukraine, primarily because it was very attractive pricewise and this was an important factor given the weak purchasing power of the local population, the UIAE reported.

In addition, last year MHP has seen its share of sales in the domestic poultry market in Ukraine shrink slightly compared to the previous year “due to a strong competition​”, according to the company’s chief financial officer Victoria Kapelyushnaya. For this reason, an increase in domestic market sales was one of the company’s top priorities for 2019, she added.

MHP sold 60% of its poultry on the domestic market and 40% in export markets in 2018, the company estimated. The company has been exporting poultry to 60 countries and anticipated that this export share would keep growing over the next few years. 

In 2019, MHP planned to export 330,000t of poultry meat, compared to 286,000t in the previous year, Kapelyushnaya said. This forecast growth was very moderate, given the increase in production of 60,000t in 2018, Kapelyushnaya added. 

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