MHP : Unaudited Financial Results for the Third Quarter and Nine Months Ended 30 September 2018

14 November 2018, Limassol, Cyprus

MHP SE

Unaudited Financial Results for the Third Quarter and Nine Months Ended 30 September 2018

MHP SE (LSE:MHPC), the parent company of a leading international agro-industrial group with headquarters in Ukraine, focusing primarily on the production of poultry and cultivation of grain, as well as other agricultural operations (meat processing and meat products ready for consumption), today announces its unaudited results for the nine months and third quarter ended 30 September 2018. Hereinafter, MHP

SE and its subsidiaries are referred to as "MHP", "The Company" or "The Group".

OPERATIONAL HIGHLIGHTS

Since Q2 2018, MHP has been launching new production sites of Phase 2 of the Vinnytsia Poultry Complex:

•  Since the end of May until the end of September, three rearing sites (brigades) commenced operations;

•  Since being commissioned at the beginning of July, the slaughterhouse has been gradually increasing its capacity utilization.

Q3 2018 highlights

•  Poultry production volume reached 150,650 tonnes, up 10% (Q3 2017: 137,005 tonnes)

•  The average chicken meat price increased by 7% year-on-year to UAH 40.38 per kg (Q3 2017: UAH 37.88 per kg) (excluding VAT)

•  Chicken meat exports totaled 80,361 tonnes, increased by 52% compared to Q3 2017 - 52,990 tonnes

9M 2018 highlights

•  Poultry production volume reached 458,540 tonnes, up 8% (9M 2017: 424,700 tonnes)

•  The average chicken meat price increased by 16% year-on-year to UAH 39.66 per kg (9M 2017: UAH 34.06 per kg) (excluding VAT)

•  Chicken meat exports increased by 22% to 213,925 tonnes (9M 2017: 176,015 tonnes) as a result of increased exports mainly to countries in MENA and the EU

FINANCIAL HIGHLIGHTS

Q3 2018 highlights

•  Revenue of US$ 442 million, increased by 19% year-on-year (Q3 2017: US$ 370 million)

•  Export revenue of US$ 275 million, 62% of total revenue (Q3 2017: US$ 212 million, 57% of total revenue)

•  Operating profit of US$ 71 million decreased by 17% year-on-year; operating margin was 16%

•  Adjusted EBITDA margin decreased to 22% from 28%; adjusted EBITDA slightly decreased to US$ 99 million from US$ 105 million

•  Net loss of US$ 48 million, compared to net profit of US$ 41 million for Q3 2017, including US$ 87 million of non-cash foreign exchange translation loss in Q3 2018 compared to US$ 17 million in Q3 2017

9M 2018 highlights 1

•  Revenue of US$ 1,136 million, increased by 17% year-on-year (9M 2017: US$ 970 million)

•  Export revenue of US$ 660 million, 58% of total revenue (9M 2017: US$ 561 million, 58% of total revenue)

•  Operating profit of US$ 283 million decreased by 9% year-on-year; operating margin was 25%

•  Adjusted EBITDA margin decreased to 32% from 38%; EBITDA slightly decreased to US$ 362 million from US$ 371 million

•  Net profit of US$ 142 million, down 44% compared to US$ 251 million for 9M 2017 mainly due to reduction in government grants income (US$ 41 million) and one-off transaction costs (US$ 33 million) related to new Eurobond issued in April 2018, as well as the non-cash foreign exchange translation loss.

FINANCIAL OVERVIEW

(in mln. US$, unless indicated otherwise)

Q3 2018

Q3 2017

% change*

9M 2018

9M 2017

% change*

Revenue

IAS 41 standard gains

442 (18)

370 (23)

19% -22%

1,136 55

970 17%

45 22%

Gross profit Gross profit margin

92 21%

86 23%

7% -2ppsOperating profit Operating profit margin Adjusted EBITDA Adjusted EBITDA margin

71 16% 99 22%

86 23% 105 28%

-17% -7 pps -6% -6 pps

354 31% 283 25% 362 32%

325 34%

9% -3 pps

312 32% 371 38%

-9% -7 pps -2% -6 pps

Net profit before foreign exchange differences

39

58

-33%

158

225

-30%

Net profit margin before forex gain Foreign exchange (loss)/gain

9% (87)

• 16% -7 pps

• (17) 412%

Net profit

Net profit margin

(48) -11%

41 11%

-217% -22 pps

14% (16) 142 13%

• 23% -9 pps

• 26 -162%

251 26%

-43% -13 pps

* pps - percentage pointsAverage official FX rate for Q3: UAH/US$ 27.3490 in 2018 and UAH/US$ 25.9022 in 2017

Average official FX rate for 9M: UAH/US$ 26.9494 in 2018 and UAH/US$ 26.4711 in 2017

DIVIDENDS

On 6 March 2018, the Board of Directors of MHP SE approved payment of an interim dividend of US$ 0.7492 per share, equivalent to approximately US$ 80 million, on 26 April 2018 to shareholders on the register as of 20 April 2018. The Board of Directors approved that no dividend will be paid on the Company's shares held in treasury.

The Board of Directors of MHP SE also acknowledged the consent of WTI Trading Limited (the Company's major shareholder) for dividends to be paid later than on the declared dividend payment date (but not later than 1 November 2018), with no interest accrued on the amount of dividend paid later.

During the nine-month period ended 30 September 2018, MHP SE paid dividends to shareholders of approximately US$ 77 million.

DIAL-IN DETAILS

MHP's management will host a conference call for investors and analysts followed by Q&A on the day of the results.

The dial-in details are:

Time:	14:00 London / 16:00 Kiev / 17:00 Moscow / 9:00 NY
Title:	Financial results for Q3 and 9M 2018
International/UK Dial in:	[phone]
USA free call:	[phone]
Conference ID:	EV00081796
Participant PIN code:	57528304#

In order to follow the presentation together with the management, please register using the following link:

http://event.onlineseminarsolutions.com/r.htm?e=1871672&s=1&k=B7CFC61F7F1D62BA990620795DB9AB85

For Investor Relations enquiries, please contact:

Anastasia Sobotiuk (Kyiv)

[phone]

For Analysts enquiries, please contact:

Iryna Bublyk (Kyiv)

[phone]

[e-mail]

Segment Performance

Poultry and related operations

(in mln. US$, unless indicated otherwise)

Q3 2018

Q3 2017

% change*

9M 2018

9M 2017

% change*

Poultry

Sales tonnesvolume,thirdparties

160,778

134,885

19%

449,215

419,080 7%

Incl. Export sales volume, tonnes

80,361

52,990

52%

213,925

176,015 22%

Price per 1 kg net of VAT, UAH

40.38

37.88

• 7% 39.66

34.06 16%

Sunflower oil

Sales volume, third parties tonnes

92,866

76,811

21%

240,970

243,896

-1%

Soybeans oil

Sales tonnesvolume,thirdparties

6,155

• 8,255 -25%

37,776

22,530

68%

* pps - percentage points

Chicken meat prices

Aggregated volume of chicken meat sold to third parties increased by 7% in 9M 2018 to 449,215 tonnes (9M 2017: 419,080 tonnes) as a result of growth in exports. In Q3 2018, export sales totaled 80,361 tonnes, an increase of 52% compared to Q3 2017- 52,990 tonnes. In 9M 2018, poultry exports increased by 22% to 213,925 tonnes (9M 2017: 176,015 tonnes), mainly driven by growth of exports in Q3 and Q1 2018. MHP continued to follow a strategy of both geographic diversification and product mix optimization, building up the volumes of chicken meat sold across the MENA, the EU, Africa and Asia.

In 9M 2018, the average chicken meat price was UAH 39.66, 16% higher than in 9M 2017. The increase in price year-on-year is mainly driven by price growth in H2 2017 compared to H1 2017 as well as a decrease in sales of frozen chicken in Ukraine. From January 2018 until the end of September, chicken meat prices remained relatively stable.

Vegetable oil

In Q3 2018, sunflower oil sales volume were 92,866 tonnes, 21% higher year-on-year. In 9M 2018, MHP's sales of sunflower oil remained stable compared to 9M 2017 at 240,970 tonnes. The changes in sales volumes in both periods are driven mainly by a change in delivery terms from DAP to FOB; since the beginning of 2018, production volume of sunflower oil remained relatively stable year-on-year. Sales of soybean oil reached 6,155 tonnes in Q3 2018, 25% lower year-on-year, as a result of lower and unattractive international soybean oil prices during the period; and 37,776 tonnes in 9M 2018, 68% higher year-on-year, mainly driven by an increase in global market price of soybean cake in H1 2018 and the low base in 9M 2017.

(in mln. US$, unless indicated otherwise)

Q3 2018

Q3 2017

% change*

9M 2018

9M 2017

% change*

Revenue

336

283

19%

952

800 19%

- Poultry and other

- Vegetable oil

263 73

218 65

21% 12%

741 211

600 24%

200 5%

IAS 41 standard gains/(losses)

(1)

Gross profit

76

2 80

150%

(9)

16 -156%

-5%

228

221

3%

Gross margin

23%

28%

-5 pps

24%

28%

-4 pps

Adjusted EBITDA

80

• 100 -20%

  234

  • 270 -13%

    Adjusted EBITDA margin

    Adjusted EBITDA per 1 kg (net of IAS 41)

    24% 0.50

• 35% -11 pps

• 0.73 -32%

25% 0.54

• 34% -9 pps

• 0.61 -11%

* pps - percentage points

As a result of the increase in sales volume and price of chicken meat, revenue increased by 19% in 9M 2018 compared to 9M 2017.

IAS 41 standard loss in 9M 2018 amounted to US$ 9 million mainly as a result of a reduction of poultry meat stocks and a decrease in the fair value of parent stock.

Gross profit of the poultry and related operations segment for Q3 2018 decreased by 5% compared to Q3 2017 to US$ 76 million. This was mainly attributable to increased production costs, reflecting higher prices of grain consumed as well as higher payroll costs, partly offset by the increase in sales volume and price of chicken meat. In 9M 2018 compared to 9M 2017, gross profit remained almost stable at US$ 228 million.

In 9M 2018, adjusted EBITDA decreased by 13%, mainly related to a decrease in government grants income (there was no allocation of grants/subsidies in Ukraine's 2018 budget), as well as an increase in administration, sales and distribution expenses mainly due to increases in payroll cost, logistics costs and warehouse rent.

Grain growing operations

In 2018 the Company harvested around 365,000 hectares of land.

Due to operational efficiency and favorable weather conditions in Ukraine, MHP delivered strong yields across all crops, especially in corn, which is a main driver of this year's strong operational and financial results compared to 2017.

The Company's harvesting campaign of spring crops is almost complete. As of the date of this report, MHP has harvested around 90% of corn and 100% of both soya and sunflower. The sowing campaign of winter crops has been completed.

2018

2017

Production volumeCropped landProduction volumeCropped land

in tonnes

in hectares

in tonnes

in hectares

Corn* Wheat Sunflower* Rapeseed Soya* Other ** Total

1,318,035

123,380

893,149 121,908

295,836

48,379

293,765 48,676

235,379

72,932

205,079 68,931

124,738

38,541

104,782 31,968

110,258

37,571

82,793 39,684

552,054 2,636,300

42,139 362,942

419,527 44,913

1,999,095

356,080

* - Harvested (sunflower and soya - 100%, corn - 90%) and presented in bunker weight; ** - Including barley, rye, sugar beet, sorghum and other and excluding land left fallow as part of crop rotation.

2018

2017

MHP's Average*Ukraine's average**MHP's Average*Ukraine's average**

Corn Wheat Sunflower Rapeseed Soya

10.2***

6.1

In process 3.8

7.3 4.9

6.0 4.2

3.2

3.2

In process 2.7

3.0 2.1

3.3 2.9

2.9

In process

2.1 1.9

* - Tonnes per hectare ** - MHP yields are net weight, Ukraine - bunker weight *** - MHP's forecast