MHP posted a pre-tax profit of $191m (£146.8m) for the six months to 30 June 2016, down 19% year-on-year. Half-year revenues also dropped by 7% to $286m (£220m).
The business attributed the poor performance to three factors: a big fall in the global price of poultry, stagnant chicken consumption Ukraine, and a low volume of grain sales compared to the first half of 2015.
In a statement, Yuriy Kosyuk, chief executive of MHP, said Ukraine had been an “ongoing challenging situation” as the country struggled with a lacklustre economic recovery amid ongoing political instability and Russian aggression.
Poultry sales tumble
Ukraine’s currency the Hryvnia has been on a downward trajectory since March 2016, which dented chicken sales. Domestic poultry sales also fell by 9% from 103,820t in the second quarter 2015, to 94,469t in Q2 2016.
The business has also been hit by a new zero-VAT levy on grain exports, which pushed domestic grain prices up by around 20%. The “challenging situation [that means] meat producers can’t raise meat prices… Most producers are struggling now and have no profitability,” an MHP spokesperson said.
However, MHP was developing as planned, despite the raft of domestic problems, Kosyuk said.
“Our poultry division expanded as forecast, totally in line with plans, and is expected to grow in volume further in the second half of the year.
“We continue to increase our presence internationally, building strong relationships with our partners overseas, at the same time growing both geographically and in volume. I believe the delivery of these results in such difficult conditions provide further validation of MHP’s unique vertically integrated business model.”
International success was reflected in a 36% surge in meat exports to the Middle East, North Africa and the EU.
The growth has fuelled a surged in production for MHP, with volumes for the second quarter up by 9% from a year ago.