Rising labour costs damage MHP’s revenue

By David Challis

- Last updated on GMT

Labour costs hit Ukrainian processor

Related tags Poultry Pork

Ukrainian processor MHP’s increased revenue and production levels have been tainted by rising labour and administrative costs, which have damaged the company's profits during the first quarter.

However the figures did not surprise chairman Dr John Rich, who described expectations for the remainder of the year as “unchanged”.

For the first quarter, ending on 31 March 2019, MHP reported a 42% increase in revenue from the previous year. Poultry production was also up 13%. Prices of chicken meat remained relatively stable, decreasing just UAH 0.1.5 per kg year-on-year.

Following the trend of the past year or so, export sales and revenue continued to increase. Year-on-year export revenue grew 65% in the first quarter, with a focus on the EU rather than China and Russia. Grain production has also increased, with a 600% rise in sales owing to a vastly improved yield compared to last year.

Management optimistic despite fall in profit

Despite the increase in revenue and production, MHP reported a 19% decrease in production compared to last year. This was attributed to increased labour and administrative costs that came in over 2018. Costs were reported to have increased by roughly 50% from last year, demonstrating a significant rise and explaining the hit taken to profit margins.

Dr Rich was optimistic about the company’s fortunes and described the efforts in the first quarter as continuing to “deliver its growth strategy, with on-time and on-budget delivery”. He referenced the increased labour costs that MHP had been experiencing since the second quarter of last year, but stated that he “remained confident in the prospects for the group”.

Another highlight for the quarter was the completion of the acquisition of Perutina Ptuj, which was the largest producer of poultry meat in the Balkans. This has had a significant positive effect on poultry production as shown in the figures for the first quarter.

Related topics Meat

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