MHP SE (MHPC.L) 2026-09-29 Earnings Call Transcript

Ladies and gentlemen, thank you for standing by, and I would like to welcome you to MHP Second Quarter 2026 Results Conference Call on the 28th of September 2026. [Operator Instructions] So without further ado, I would like to pass the line to Anastasiya Sobotyuk, Director of Investor Relations. Please go ahead, ma'am.

Thank you, Rafael. Dear stakeholders and partners, good day to you, and thank you for joining MHP's conference call covering second quarter and 6 months of the year. My name is Anastasiya, Investor Relations Director, and I'm joined today by Viktoriia Kapeliushna, CFO of MHP. Together, we will present and discuss the company's operational and financial performance for the reporting period. Please note that today's discussion is based on the press release, financial statements and investor presentation published earlier today. During the call, we may also discuss our outlook, strategic priorities and future plans. These statements are based on our current expectations, assumptions and assessments of market conditions and are, therefore, subject to risks and uncertainties. We encourage you to consider these factors when evaluating the information presented today. With that, let us begin. We are on Page #3 of the presentation. Let me start with a brief overview of the macroeconomic environment in Ukraine. The operating environment remains challenging, but the economy continues to demonstrate a degree of resilience. In the second quarter of 2026, real GDP increased insignificantly less than 1% year-on-year and by less than 1% compared with the first quarter. This growth was achieved despite continued missile attacks on infrastructure and ongoing pressure on the energy system. For the full year, the National Bank of Ukraine currently expect GDP growth of around 2%. The outlook continues to reflect significant infrastructure damage, electricity constraints and the impact on higher energy prices. Turning to inflation. Quarter-on-quarter CPI moderated to approximately 2.2% in the second quarter compared to 3.4% in the first quarter. According to the latest NBU forecast, average annual inflation is expected to reach 9.4% with a further gradual decline projected over the following 2 years. On foreign exchange, the Hryvnia has continued to weaken during the year. The exchange rate moved to approximately UAH 44.5 per USD 1, reflecting among the other factors, damage to the energy sector and the broader external environment. As before, the NBU continues to play an important role in managing foreign exchange market imbalances. Finally, looking at agriculture, the 2025 harvest demonstrated continued resilience of the Ukrainian agricultural sector. Total grain production reached approximately 63.5 million tonnes -- I'm sorry, I'm talking about 2026, of course, and 63.5 million tonnes is up by 13% year-on-year. Wheat production was around 23 million tonnes and corn was approximately 31 million tonnes. At the same time, oilseed production was weaker with sunflower production declining by 7% to approximately 10 million tonnes. Overall, the macro environment remains demanding, particularly from infrastructure, energy and foreign exchange perspective, while economic activity and the agricultural sector continue to operate with a significant degree of resilience. Let us move on Slide #4. It's about the financial overview. So for the first 6 months of 2026, revenue of the company increased by 32% year-on-year to around $2.161 billion. The main driver of this increase was the consolidation of UVESA within our operating segment -- European operating segment. Gross profit increased by 8% to $397 million. The increase was more moderate than the growth in revenue as the positive contribution from agriculture and UVESA was partly offset by a weaker performance in the Poultry segment. Operating profit decreased by 17% year-on-year. Adjusted EBITDA, net of IFRS 16 remained broadly stable at USD 232 million compared to USD 236 million in the first half of 2025. The corresponding EBITDA margin declined from 14% to 11%. At the net income level, the group recorded a loss of $57 million compared with a profit of $75 million -- sorry, $75 million exchange loss in the current period compared with a gain in the prior year period. So 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. At the same time, the second quarter showed a meaningful sequential improvement in operating performance. Let us move on Slide #5. And let's look at the financial results by segment. Starting with the revenue mix. Here, Poultry and related operations remained our largest segment, generating USD 976 million or approximately 45% of group revenue. The European operating segment contributed USD 738 million, representing approximately 34% of group revenue. The EBITDA contribution, however, was quite different from the revenue mix. Agriculture was the largest contributor to first half adjusted EBITDA, net of IFRS 16, generating USD 149 million. The European operating segment contributed $86 million, while poultry and related operations contributed $49 million and vegetable oils only $9 million. Looking at the EBITDA bridge versus the first half of 2025, group adjusted EBITDA net of IFRS 16 moved from $236 million to $232 million, meaning remained stable. The largest negative movement came from poultry and related operations with a reduction of USD 118 million. This reflects lower meat prices, lower sales volumes and higher costs. This decline was largely compensated by strong performance in other businesses of the group. I think we are ready now to move to the segment overview. And I think, Viktoriia, we can move on.

Thank you, Anastasiya. Good afternoon, everyone. Let's turn to poultry and related operations segment performance, Slide #6. Following the softer pricing environment we experienced in Q1, poultry export price showed a partial recovery through Q2 this year. So the segment's results still reflected the pass-through of the weaker price based earlier in the half. Both poultry meat and processed meat volumes grew year-on-year and quarter-on-quarter. Domestic sales volume remained relatively low, with growth driven by high export sales to European market. Processed meat volumes continued to grow, supported by our ongoing shift towards high value-added products. Revenue for Q2 increased by 10% year-on-year and by 15% quarter-on-quarter to $523 million and for 6 months increased by 9% year-on-year to $976 million, driven by higher sales of byproducts from poultry production as well as energy products such as biomethane. Average selling price for poultry meat decreased year-on-year in both periods, while showing a partial recovery on quarter-on-quarter basis. Price for processed meat continue on consistent upward trend. Gross profit declined to $63 million in Q2, down by 48% year-on-year and to $123 million for 6 months, down 44% year-on-year, primarily reflected lower meat price and higher production costs, together with significant effect of IFRS 41 biological assets revaluation loss compared to the gain in the prior year period. Adjusted EBITDA net of IFRS 16 followed the same trend, down 65% year-on-year in Q2 to $30 million and down 70% for 6 months to $49 million, while improving 58% quarter-on-quarter as pricing stabilized. I would like to also note that following [indiscernible] attack on Black Sea port and export infrastructure, the group managed to adjust its export delivery routes for poultry products. There is no significant effect on export logistics and volume to EU and U.K. However, it remains challenging and take longer and more expensive to export to Middle East and Africa. Looking ahead, Poultry export price reached the low point in Q1 this year and have shown gradual recovery since through -- we don't expect a quick return to the peak level seen during the Q2 and Q3 last year. Poultry export price in EU remain weak. At the same time, should the disruption to Black Sea grain logistics continue to weigh on regional grain prices, this could help offset pressure on the segment production cost in the second half of this year. Turning to our Vegetable oil segment, Slide #7. Revenue in Q2 increased by 38% year-on-year and by 25% quarter-on-quarter to $145 million and for 6 months increased by 17% year-on-year to $261 million due to the higher sunflower and soybean oil prices together with higher sunflower oil sales volume. Sunflower oil sales volume continued to grow both year-on-year and quarter-on-quarter, supported by the launch of new sunflower extraction line, which increased oil yield and expanded overall processing capacity. Soybean oil sales volume remained low year-on-year through stable on this basis, mainly due to the high internal consumption of soybean oil in feed recipes. Gross profit increased in Q2 and 6 months, driven by higher sales volume and improved margin in sunflower oil. Adjusted EBITDA follows the same trend increased to $7 million in Q2 and $10 million for 6 months. Looking ahead, the segment profitability will remain highly dependent on the availability of export routes from Ukraine port, which has already had a significant effect on price for our key inputs, sunflower seed and soybean. Should the situation persist, we see potential for substantial improvement in segment profitability through an increase of processing volume and better margin due to the low price of oil crops in Ukraine. As of today, despite closed port of Black Sea in Ukraine, MHP established a number of ways and roads to export vegetable oils to partners in different parts of the world. Let's move to Slide #8, Agriculture operations. Revenue for 6 months remained broadly stable year-on-year, $186 million. Gross profit more double $141 million due to the higher effect of IFRS 41 biological assets revaluation gain compared to the last year. Adjusted EBITDA following the same trend, more than double. Such improvement were the result of significantly improved market price for both grains and oilseeds at June and July this year. Winter crops harvested is complete with yield 6.7 tonnes per hectare for the wheat and 3.8 tonnes per hectare for rapeseed. Harvesting of spring crops is underway with yield expected broadly in line with last year. Looking ahead, however, I should note that since July this year, prices for grains and oilseeds have declined in Ukraine, reflecting the same export capacity constraints I referenced earlier, driven by logistics cost increase. Should this trend persist, it could be weight of EBITDA in this segment. So we would expect this to be largely offset by lower production cost in our poultry and vegetable oil segment starting mainly from Q4, given those segment direct exposure to grain and oilseed input costs. Let's proceed to Slide #9. Several words about our European operating segment. Revenue for Q2 more than doubled year-on-year to $384 million and increased 8% quarter-on-quarter, while 6 months revenue more than doubled year-on-year to $738 million, driven by consolidation of UVESA and supported by higher processed meat sales volumes and prices. Gross profit increased by 26% year-on-year in Q2 to $59 million and 57% for 6 months to $124 million as higher revenue outpaces the increase in cost, further supported by positive contribution from the UVESA acquisition and positive revaluation of those and peak following the price recovery on Spanish market. EBITDA followed the similar trend, up 47% year-on-year in Q2 to $44 million and 76% for 6 months to $86 million. Looking ahead to the remainder of 2026, we expect price for poultry and processed meat in European operating segment to remain broadly stable with sales volume continue to grow. This is expected to support steady growth in EBITDA over the course of the year. Slide #10. A few words about our cash flow, debt and liquidity. Operating cash flow for 6 months decreased year-on-year, driven by lower cash earnings, mainly reflecting negative trend in poultry meat prices. Working capital represented an investment $107 million in 6 months. including seasonal investment in crop field, partially offset by consumption of agricultural produced harvest in 2025. CapEx decreased to $93 million for 6 months with capital expenditure focused mainly on key strategies area, including the maintenance and modernization of existing facility. I would like to also note that on 16th June 2026, our Spanish subsidiary, UVESA acquired 100% of Payán, it is a Spanish poultry company for total consideration EUR 28 million. The acquisition generates goodwill EUR 17 million and accounting remains provisional as of 30th June 2026. The transaction strengthens our position in the Spanish poultry market. Regarding the debt, the shift towards long-term debt reflected this year's refinancing of the $550 million Senior Notes due 2026 with new Senior Note due 2029. Cash and cash equivalents stood at $348 million by the end of the first half of the year. The Group complied with all bank covenants of the 30th June of 2026 with the acquisition leverage ratio reflecting UVESA on a full pro forma basis of 2.8:1 comfortably below the 3.0. Now I give the floor to Anastasiya.

Thank you very much, Viktoriia. Before we conclude the presentation, let me briefly summarize the current operating environment. The first half of 2026 demonstrated the resilience of MHP's diversified business model with strong contributions from agriculture, vegetable oil and European operating segment helping to offset pressure in Ukrainian poultry. At the same time, the operating environment in Ukraine remains highly challenging. 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. A number of the logistics -- Group's logistics warehouses were also destroyed with estimated losses currently at approximately $6.5 million. As we approach the winter period, we remain particularly focused on the potential for further disruption to energy infrastructure, logistics and export capacity. At the same time, MHP is well positioned to meet energy disruption challenges, taking into account long-term CapEx program since 2022. The situation remains fluid and the visibility on the duration and ultimate impact of these disruptions is limited. At the same time, we continue to develop our European assets in line with the plan. Perutnina Ptuj continues to demonstrate solid operational performance and development, while the integration of UVESA is progressing according to plan. We are already seeing improvements in operational efficiency of UVESA and continue to focus on realizing the benefits of the enlarged European platform. This is consistent with the strong contribution from the European operating segment during the first half of the year. Overall, our priority remains to preserve resilience and financial flexibility in Ukraine while continuing the disciplined development of our European operations. We remain focused on maintaining resilience across the group while adapting our operations to the changing environment. Thank you very much for your attention, and we would now be pleased to take your questions.

[Operator Instructions] Our first voice question comes from Stella Cridge from Barclays.

Thanks for all the updates in the release today and for talking through all the complexities of how the port closure impacts the business. I have a couple of questions, if that's okay. I was just wondering on a couple of the follow-ups on redirecting the goods. Could you just give us an idea of what the alternative routes would be for exporting poultry to Middle East or Africa or what the alternative routes are for the vegetable oils? And for the Agricultural segment, I wanted to ask, do you think you can still sell all the volumes? Or might there be some kind of accumulation of inventory? And maybe if I could start with that, I'll follow up with the other question.

Stella, thank you for your question. Now regarding the [indiscernible] Black Sea port regarding poultry, as I told that we have a completely different logistic route for MENA and for South Africa. We have 2 different ways, one of them through Klaipeda and other through Constanta. And yes, we don't see any big problem with this. Just anyway, it is a problem because logistics cost increase -- cost of logistic cost. Regarding oil because you know that every month, we produce around 50,000 of oil, different sunflower and soy oil. And before the situation, we exported directly to Europe, to Italian, our client only 10%, 15%. Now we exported to Europe directly through West border around 50%. And the rest, we exported through the same circumstances, this way -- anyway, and yes, it is -- yes, we tried to find different way. It is the more optimal for us. Regarding grain, yes, it is the more difficult -- the most difficult issue. Now to be honest, regarding rapeseed, it is -- we exported almost all rapeseed to Europe, which we did previously directly without any sea. But at the same time, regarding wheat and corn is the biggest -- is a big problem because logistic cost today is a crazy figures. But at the same time, you know that we consume internally almost 95% of total corn, yes. And that is why we will consume this corn for further. And just now, we are working hard exporting 50% of our wheat, which is approximately 150,000 tonnes. Mostly the same we export through Europe.

If I could perhaps ask on a different topic. With the Greece acquisition, so see saw leverage kind of pick up quarter-on-quarter. Do you think you still have the headroom within the covenants to go ahead with this acquisition? Or how might you address that issue?

No. First of all, you know that we have covenants regarding our bonds and all our debt. It is incurrence covenants. Yes, you know that our covenants. Yes, we have just -- we don't have any problem with default because it is not maintenance covenants. It is just issue regarding to take new loan. Okay, we understand how difficult current situation, especially why we have so difficult situation because, first of all, with business, the situation regarding business in Ukraine, because financial results in Ukraine, I'm sure this year, unfortunately, will be -- would be one of the lowest during the last 10 or maybe even 15 years due to the current situation. But at the same time, we told a lot of time all investors, bondholders, yes, 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. Yes, okay -- we will try to find...

Apologies since we have some problem with Viktoriia connection. Viktoriia, we cannot hear you.

Sorry, do you hear me?

Yes, we can hear you now.

Now, do you hear me?

Yes, yes. Please go ahead..

Okay. I answered question again? Because I don't know when...

We got to hear you when you said it was important for stability.

Okay. Maybe better next question.

Okay. Maybe I'll just do one final one, and then I will get back in the queue. We didn't hear the full answer. We got up to when you said you spent time with bondholders. It's very important for stability. And then you said you'll try to work on something, but we just missed the last bit.

Yes. Okay. Okay. Just my few last sentences. Yes, okay, it's important to provide -- as I told, it's important to provide our expansion. And no, we will find -- we will try to find some solution for this, okay? Because expansion for us is very, very important.

Yes. So one just final one, if I can squeeze in. I just wanted to ask about this short-term debt. So you have around about $600 million in short-term debt. I was just wondering how much of that you think you can roll? How much you need to work on for the refinancing? And if you do need working capital for grains, for example, do you think you can get that from local banks, for instance?

Yes. Regarding working capital, yes, we have short-term debt mostly from local banks. It is a total short-term debt around $350 million. But due to the current situation, yes, we have some issues regarding our agri segment. But at the same time, we try to provide some optimization possible in working capital in our direction. That's why our expectation even for this year, very difficult year -- yes very difficult year and our expectation about investment in working capital, approximately $20 million to $30 million.

That's clear. And you know the other part of the short-term debt that's not from the local banks. Is that some refinancing you need to work on? Or what specifically do you have coming due?

Yes. Please clarify your question about what -- you're looking for what?

Sure. Sure. So of the $600 million in short-term debt, so you have the portion to local banks? And the other debt that's coming due in the short term that you would need to refinance, is there some things you're working on?

Yes. I told you, yes, because I don't know where you find $600 million, but I know that next year, we need to repay approximately $150 million and some debt from our European companies around $30 million.

Our next voice question comes from Gustavo Campos from Jefferies.

Your updates very helpful. Yes, a few questions from my side. If you could please like elaborate a bit. I know that the situation is very fluid and a lot can still change by the end of the year. But could you provide like an update in your EBITDA and CapEx guidance for the year, maybe like some expectations on working capital dynamics. All of that would be very helpful and much appreciated.

Thank you so much for your question. Thank you for your understanding how difficult to say our forecast about EBITDA this year, especially due to the current situation, 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. What we do regarding CapEx, since May this year, we completely stopped all our new CapEx in Ukraine. Unfortunately, some projects we started -- it is not new project. It's a project which we started in 2025. That is why total -- our CapEx for full year, it would be around $220 million, $240 million. Yes, include maintenance CapEx, you understand that level of maintenance CapEx for our business is the biggest approximately Ukraine plus our European perimeter, our maintenance around [indiscernible]. Regarding working capital, yes, we try to provide optimization, especially working capital. trade receivable, but is it possible, yes. And we suppose that the investment in working capital this year would be around $20 million, $30 million.

Understood. If I may just quickly follow up here, just to clarify. So in the first quarter, you printed around $80 million of EBITDA. In the second, it's $30 million. So if you are guiding for roughly $430 million, it seems that you would be expecting a material uptick in EBITDA for the second half of 2026. Is that correct? And could you please like explain some of these drivers for this recovery?

Yes. We understand -- as I told you, we understand that price of meat now versus the second quarter and especially now we see it higher than especially in the first quarter, one of the driver for our price. And I told our expectation, better financial results in oil crush businesses. Yes, this is maybe 2 drivers for this result. And European operations -- European operations in the second usually and how we see this. Yes, second half of the year is higher than the first half of the year. Is it higher volumes, and we see the price more or less same.

Understood. Yes, apologies for my mistake. It's actually $153 million of adjusted EBITDA that you printed on the second quarter. Yes, so I see that results are still going to be more or less not too different from the first half of 2026. And like ultimately, you are expected not material working capital outflows. Is that correct?

Yes, yes. Yes, you're correct.

Okay. Another follow-up question. Is the $6.5 million of logistics impact that were -- there was like some asset damage. Is that the only asset damage that was incurred year-to-date, only $6.5 million? Or is there like some other impact that's not included in this number?

No, until today, yes, it is just inventories on cost base. Yes, is it our meat, calculated on cost base. Just inventory because -- yes, you're right. No, it's very difficult to predict what we receive or what we will see tomorrow. But until today, yes.

Yes, yes, absolutely. And lastly, could you please just quantify some estimates of like EBITDA margin impact of the higher logistical costs that you are incurring since you can no longer rely on the Odesa ports. I'm just trying to understand how much more expensive costs could be under this new status quo. That would be my last question.

Regarding poultry, regarding only poultry segment, it would be approximately $20 million increase in logistic cost.

Understood. And for the agricultural segment?

No, for agriculture segment. Yes, it's agricultural segment because we are finding because -- yes, mostly corn, we consume internally. Regarding rapeseed, yes, the same road, and previously because -- yes, logistic cost to Europe did not increase so significant, just increased in line with the increasing price of fuel. No, it is not just increased for MHP for everybody in the world. That is no problem. But regarding poultry -- yes, but if you think about, for example, how increased logistic cost for oil, it has increased approximately by $80 per tonne, $80 per tonne.

Understood. Understood. That's very helpful. And those like higher logistical costs, are you also considering like higher rail costs because there was like a higher increase from tariff by Ukrainian railways as well. So I was wondering if that's also embedded in the $20 million that you mentioned.

No, no, no, no, $20 million because you understand when we -- previous when we sent our product by -- from Black Sea -- through Black Sea, it was one tariff. Now we sell our product through Klaipeda and through Constanta, it is a rail cost to the city and is a higher freight, especially from Klaipeda.

Our next voice question comes from [indiscernible] from EBRD.

I would like to have a question related to the oil segment. Oil crushing segment, as you see, you said just that there is a huge increase in prices for export of oil, right, but we see a huge decrease in sunflower seeds prices. Do you expect maybe increase in working capital for the need for crushing in order to kind of make inventory of sunflower seeds at lower prices?

Yes. Thank you for the question. First of all, you need to understand that current price on sunflower seeds significantly lower, approximately by 30% lower that price of sunflower seed last year. And that is why you understand, by the end of last year, we had approximately 200,000 tonnes of sunflower seeds in our stock with price high 650. Today, it would be less -- we need to invest less amount -- money, less money because current price 450, you understand. But at the same time, you're completely right, road is the longest, yes, and we need to invest means working capital in trade receivables. Yes, but regarding this business, crushing business, I think it would be very compensate, yes, low investment in our stock, will compensate the high investment in trade receivables and goods on transit.

Can I ask follow up on that? Because as you always said that you see all crushing is more like a segment which provides feed for poultry, right? With this maybe improvement in margins, generally crushing, do you expect like to increase utilization of your processing capacity like to the maximum level and maybe...

Yes, you're completely right. Yes, as I told previously this year, we launched extraction. And last year, we produced approximately 25,000 sunflower oil. Now we produce around 50,000 sunflower oil per month because the yield of oil -- because now we have -- extraction is high just pressed. And what's your question about...

Yes, utilization. We achieved like almost 100%.

Yes, yes. And now we not just -- what I would like to emphasize that not just high level of utilization in this capacity, and we launched new capacity extraction plan.

Yes. Okay. Also, I would like to maybe follow up on poultry that in the second half of the year, do you expect like generally poultry to improve a little bit or it would be basically on par with what we see in the first half of the year?

No, no, we improved. As I told -- thank you for your question. Yes, improved because price is -- especially price right now higher than price in the first quarter. Second, very important issue is that since the fourth quarter, cost of production would be slightly lower of chicken. Why? Because protein from crushing business -- cost of protein will be lower and price of corn, yes, on Ukraine will be lower compared to the -- in the first half of the year.

So you expect that from the third quarter, right?

No, to be honest, I expect from the 1st of September, maybe 15th of September. That is why it's better to say I expect from fourth quarter.

Okay. And also a final question about Agriculture segment. As we saw like in the first half of the year, agriculture was a big driver. So basically, we should expect in the second half of the year like a huge reversal. And basically, like what's your outlook generally?

You're completely right. Yes, you're completely right. Because 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.

So basically, it would be like almost elimination of all those 41 standard adjustments that you make, basically.

Yes, it would be adjustment, yes. You're right.

We are moving to the next voice question that comes from Vidhi Veera from Goldman Sachs.

I just wanted to better understand the dynamic between cost of grain and poultry segment and the intersegment profitability. How much of the consumption of grain internally for poultry business, like do you produce on your own and versus you're buying outside? Why I'm asking that is right now, grain prices in Ukraine are much lower than outside. But if you only need your own grain, like the cost base doesn't improve much, right, because you're spending money on your own grain, et cetera. So how do we think about second half profitability under these 2 dynamics. Your grain prices going lower and poultry prices sort of remaining stable or improving?

Yes. Thank you for the question. Yes, regarding consumption of grain in poultry segment, yes, 90% of corn, which we produce in company, we consume internally. But what is very important to understand is that just in fourth quarter because now we are greater in corn, and we started to put in further new corn with new low price since the 20th of September only. And we will see some effect only in the fourth quarter. And 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. You understand? And the same with wheat, but wheat totally is not a lot, 50% of wheat, we consume the same internally. And we will have benefit in our cost of production of chicken. Yes, the same part of them in the fourth quarter and the 3 quarters next year. That is why we understand even price of chicken will continue at the same level. We will have benefit in the -- we will have better financial results in the fourth quarter and during the 9 months 2027.

Got it. Got it. But overall, that will be offset, right, on a company level, that will be offset by the decline in margin in the grain growing operation.

Yes, yes. But it was different year, different financial year, just 1/4 in 2026 and 3/4 in next year.

Okay. Got it. And just one more thing on grain growing. If the logistics situation is to remain as challenged as it is today, would it yet be possible to continue to export as you have historically in the wheat and corn? Or would there be a chance that the company may choose not to export and sort of to keep it given logistic costs are very high?

Yes. No, yes, because you know that the price of corn increased significantly in Europe, significantly increased. But current logistic cost to Europe approximately is a crazy figure. It's approximately $80. But it's possible. And I know that some company now is exporting corn, yes. But it would be very difficult because -- but in generally, yes, Ukraine every year exported approximately 20 million tonnes of corn. It would be unrealistic this year if our Black Sea is open. No, based on current situation, I know that our business has very good level and characteristic of adaptation. So business -- Ukrainian business, not MHP, it is not very important for MHP because the consumers are [indiscernible] in general.

And sorry, just one last one from my side is the European business. We see like margins coming down a bit versus previous years where it had reached double digits, 12%, 13% and now again, it's come down to single digit. What's driving this? Is it like the acquisition, which is dilutive? And what is the forward-looking guidance for European business margin?

Yes, you're completely right. If you look at our European operations, European company, yes, current profitability in UVESA, no -- even not current, in 2025, it was less than 10%, it was approximately 8%. Our target is 15%. And Perutnina today has profitability EBITDA margin around 15%. This year, I'm sure that in UVESA, we will have double digit, but not 15% because you know that we have the big issues regarding price of pork. Regarding poultry, we see a very good result in poultry. We significantly increased our profitability in poultry. But unfortunately, we have, very, how to say, bad result in pork due to the collapse with pork price in Spain. But our target -- anyway, our target, and we understand how we will achieve 15% EBITDA margin in our poultry business in Europe.

Thank you very much. [Operator Instructions]

Rafael, thank you very much. Thank you for the update. Dear investors, bondholders, stakeholders and partners, thank you very much for the participation at the call. We were glad to hear you and your questions. As Rafael mentioned, we can proceed with answering your questions. Please use our e-mail addresses and reach us as you know. Thank you, and have a lovely day. Goodbye.