MHP's Grain Mirage: The Black Sea Closed, and the Paper Profit Will Unwind

Ukraine's poultry exporter grew revenue 32% on a Spanish deal and booked its best segment profit from an accounting revaluation — then guided to an H2 recovery it can barely see.

MHPC.L · Earnings Call · 2026-09-29

The Stability That Isn't

MHP SE reported a first half that looks, on the surface, like resilience: revenue up 32% to roughly $2.161 billion, gross profit up 8%, and group adjusted EBITDA essentially flat at $232 million versus $236 million a year earlier. Underneath, three engines are pulling in three directions. The revenue surge came almost entirely from folding Spain's UVESA into the European segment; the EBITDA margin thinned from 14% to 11%; and the group swung to a $57 million net loss on softer poultry economics and foreign-exchange swings. “the key message for the first half is that strong revenue growth, including the contribution from UVESA supported broadly stable group EBITDA, while profitability was affected by weaker poultry performance, higher operating expenses and foreign exchange movements.” — Anastasiya Sobotyuk, Director of Investor Relations · 2026-09-29 The backdrop offers no relief: Ukrainian GDP grew less than 1% year-on-year, the NBU targets about 2% for the full year, inflation is running near 9.4%, and the Hryvnia has slid to roughly 44.5 per dollar. The 2026 harvest was strong — grain output up 13% to 63.5 million tonnes, wheat at 23 million — but sunflower production fell 7%, to about 10 million tonnes, which matters more than it first appears.

The $149 Million That Isn't Cash

Agriculture delivered $149 million of first-half adjusted EBITDA, the largest single contributor and more than double last year. That profit was not operational — it was an accounting artifact. IFRS 41 marks biological assets to the grain and oilseed prices prevailing in June and July, when Ukrainian prices spiked. Management was unusually candid about what that means for the second half.

according to the IFRS standard, we recognize our profit base of price, which we had in Ukraine market -- Ukrainian market price in June, July. Yes, it was completely as a life. Current price, our expectation, yes, no -- regarding grains, nothing changes. But regarding corn, yes, it would be low.
Unknown Analyst, Analyst · 2026-09-29

An analyst pushed on the point — "so basically, it would be like almost elimination of all those 41 standard adjustments that you make" — and the CFO agreed outright. Since July, Ukrainian grain and oilseed prices have slid on export-capacity constraints. So the half's best segment result is a paper gain destined to reverse, and it flagged the sunflower seed price collapse (down ~30% year-on-year, from roughly 650 to 450) as both a stock-cost tailwind and a grain-margin headwind.

A Port Closed, a Bottleneck Created

The freshest signal sits in MHP's own keyword set: Black Sea and logistic cost are the new high-momentum themes of this call, and management used a plain phrase for the cost trajectory — "crazy figure." Attacks on Black Sea ports and logistics infrastructure have closed the ports entirely.

Recent attacks on Black Sea ports, as Viktoriia commented already, commercial shipping and logistic infrastructure have increased freight cost, disrupted loading schedules and reduced the reliability of export. As of today, the ports are closed, as you understand.
Anastasiya Sobotyuk, Director of Investor Relations · 2026-09-29

For years global markets fixated on the Red Sea as shipping's choke point; for Ukrainian agriculture it is now the Black Sea. MHP has rerouted: poultry for MENA and South Africa flows via Klaipeda and Constanta, and sunflower oil is increasingly shipped west overland. The bill is concrete: “Regarding poultry, regarding only poultry segment, it would be approximately $20 million increase in logistic cost.” — Viktoria Kapelyushnaya, Chief Financial Officer · 2026-09-29 The human cost of the war showed up too — destroyed logistics warehouses and about $6.5 million in estimated losses. The consequence is the core wound of the quarter: Poultry and related operations EBITDA collapsed 70% to $49 million for the half, to just $30 million in Q2, as lower export prices and higher costs compounded. That the group still held EBITDA broadly flat is a testament to its diversification — not to its flagship.

The Recovery Bet — and Its Offset

Management nonetheless holds full-year adjusted EBITDA guidance of $420–450 million, implying a sharp second-half pick-up. “we understand this year, unfortunately, we will have a level of EBITDA lower than we expected and we had in our budget. But current our understanding approximately $420 million, $450 million, yes. We will see.” — Viktoria Kapelyushnaya, Chief Financial Officer · 2026-09-29 The drivers are a poultry price recovery off the Q1 trough and, more interestingly, cheaper feed: new-crop corn entering rations from late September cuts the cost of poultry production from Q4 into 2027. But the CFO was equally clear that this runs against the grain segment's reversal. “during the 9 months 2027, we will have positive effect in our cost of production in chicken. But this year, we will have low profitability in our grain segment... we will have benefit in the fourth quarter and during the 9 months 2027.” — Viktoria Kapelyushnaya, Chief Financial Officer · 2026-09-29 This is the tension that defines the report: the company is asking investors to accept a bad segment (grain) getting worse on IFRS accounting while a worse segment (poultry) turns better on cost deflation — and to trust it nets out. The crushing business is the bridge, now running near full utilization after a new extraction line roughly doubled oil output to about 50,000 tonnes a month, with low oilseed prices and cheap feed protein both flowing into the poultry cost base.

Europe as the Insurance Policy

The strategic logic is that Ukraine is unforecastable and Europe is the hedge. The UVESA integration is progressing, the Payán bolt-on added Spanish poultry capacity, and Perutnina runs near a 15% EBITDA margin. But even the hedge has a blemish: the Spanish pork-price collapse dragged European profitability to single digits, and management conceded the 15% target applies to poultry, not to the whole perimeter this year. On solvency, the CFO leaned on structure — covenants on the bonds are incurrence-based, not maintenance-based — while managing roughly $350 million of local short-term debt and about $180 million maturing next year, with working-capital investment guided to just $20–30 million and CapEx cut to $220–240 million after new Ukraine projects were halted in May. The message: “for MHP, it is very important to provide expansion outside in Ukraine, especially in Europe. First of all, it's very important, the same for our stability because unfortunately, yes, the environment in Ukraine, very unpredictable.” — Viktoria Kapelyushnaya, Chief Financial Officer · 2026-09-29 A small-cap ($386 million) Ukrainian agri-exporter is telling a story of paper profits unwinding, a closed Sea, and a long bet on European consolidation — three threads that will only be resolved by a winter of war and a second-half execution test.