Ladies and gentlemen, thank you for standing by, and I'd like to welcome you to MHP First Quarter 2023 Financial Results Call. At this time, all participant lines are in listen-only mode. The format of the call today will be a presentation by MHP's management and IR team, followed by a Q&A. Without further ado, I would now like to pass the line to MHP team. Anastasiya, the floor is yours. Thank you very much, team. Dear stakeholders, good afternoon and good morning. Thank you for joining us today for MHP conference call. I'm Anastasiya Sobotyuk, Director of Investor Relations and International Communications. On the call today together with Viktoria Kapelyushna, CFO of MHP, we will discuss MHP's financial and operational results for the first quarter of 2023, as well as current operational environment and expectations for 2023, taking into account that war in Ukraine continues. Today's call is based on information released earlier today publicly. However, during our call, we will discuss our projections and plans based on our assumptions, domestic and international trends. Please take it into consideration. Let me proceed with the presentation. We all go to page number three with macro fundamentals. Let me start from how we live and operate. I would love to note that from October 2022 and up to now, Russia has been launching a number of missile and drone attacks against energy and civil infrastructure of Ukraine, targeting Kyiv massively during the last 2 weeks. The terrorist attacks seriously and adversely affected energy distribution across Ukraine. In the first quarter of 2023, Ukrainian citizens and companies, including MHP, faced complex challenges related to providing energy to their homes and production facilities. The impact of the war in Ukraine remains unclear and can change seriously, quickly, and without any notice. When we look at macro environment in the first quarter of 2023, it was as follows: Ukrainian economy has been adjusting to the war environment, heavily supported by international donors. Black Sea Grain Deal has been prolongated just yesterday by another 2 months. However, we understand that operational routines remain challenging due to delays in ship checks in the Bosphorus from the Russian authorities. For traders in Ukraine, it is absolutely difficult, if not impossible, to plan any logistics properly. National Bank of Ukraine forecast GDP growth of, sorry, of 2% in 2023, and annual inflation of 15%, with around 27% inflation in 2022 for your records only if there is no further deterioration of the hostilities. The currency ratio remains more or less stable. Let me proceed with the company's results, and we go to page number five of the presentation. We are on slide number five, key financials. Sorry. MHP is reporting good operational and financial results for the first quarter of 2023, thanks to strong demand, positive price movements, and minimal disruption to operations as a result of the enormous amount of work undertaken by the MHP team since the beginning of the war. It should be noted that operational and financial results in the first quarter, 2022, last year, were more seriously affected by disruptions in the early stages of the war. Results for the next periods of this year may again be adversely affected by war-related challenges, but of course they are not under MHP control. When comparing the first quarter of 2023 results generated by businesses in Ukraine, please keep in mind that operational environment in March last year, that was the first full month of the war, was absolutely different to March 2023, and operational and financial results of MHP in the first quarter last year were significantly and negatively affected by war-related challenges Ukraine has been facing since then. I would suggest to focus on the comparison of the first quarter 2023 with the fourth quarter last year. It is more relevant. The results for the first quarter 2023 were following: revenue increased by 35% year-on-year and constituted $746 million and was down 3% quarter-on-quarter. War-related expenses decreased substantially by 77% to $6 million, and that was $26 million in the first quarter last year. Export revenue increased by 69% to $520 million, which is 70% of total revenue, and increased 6%, by 6% quarter- on- quarter. Adjusted EBITDA, net of IFRS 16, increased year- on- year to $117 million from $43 million last year same period and was 7% higher quarter on quarter. Adjusted EBITDA margin increased to 16% from 8% in the first quarter last year and from 14% in the fourth quarter 2022. Let's proceed to page number six, where we can see, The financial results by segment. As you can see from the table, the vast majority of revenue as well as EBITDA in the first quarter 2023 was generated in poultry and related operations, which included the results from the crushing of vegetable oils and by the European Operating Segment. Traditionally, due to seasonality effects and partially because of disruptive grain deal operations, contribution to the revenue from grain growing segment was low, 4% only. Let's have a closer look at each business segment and results on our next slide. Here I pass my word to Viktoria. Viktoria, seems like you're on mute. Sorry. Thank you, Anastasiya. Good afternoon, everyone. Let's have a precise look at poultry segment performance, page number seven. Our good result in Q1 were possible because our team was able to maintain sales volume and average mid-price across all markets at the same level as in Q4 2022. In Q4 2022 as well as Q1 2023, we had an additional positive effect on the cost of the cake and fodder for poultry production due to the favorable ratio of price between sunflower and sunflower oil. Currently, we see that price ratio between sunflower and oil has stabilized. Therefore, we don't expect so positive effect on production costs to continue to be in place going forward, unless the situation changes. Export price from the beginning of September 2022, due to the change in the economic environment in E.U. and U.K., as well as increased competition in the MENA region, started to decline, which result in 5% decrease in price quarter-to-quarter. As of now, current price in E.U. and MENA region have stabilized. At the same time, poultry meat price in Ukraine, despite substantial decrease in population and disposable income increased by 8% in Q1 compared to the Q4 but this is still lower than in Q1 2022 by 10% in dollars term, driven mainly by depreciation and Ukrainian hryvnia. MHP is regularly exposed to commodity price risk. To mitigate this risk, we continue to focus more and more on non-commodity product ready to eat and ready to cook. Penetration and increase of our share on this market require a lot of effort and expenses as today and in the near future. Let's move in slide number eight, grain growing operation. It is important to highlight that despite of a quite high price of grains on international market, export price for grain from Ukraine is significantly lower compared to the international price due to logistic cost substantial increase as a result of the war in Ukraine and challenge unstable logistic and reparations in grain deal. This operational environmental negatively affects the profitability of MHP as well as all agri producer in Ukraine. Revenue in grain segment in Q1 increased to $69 million from $35 million last year, mainly due to the high export of crops as a result of partial restoration of logistics routes compared to the operational environment at the beginning of full-scale Russian invasion in Q1 2022. EBITDA of grain segment net IFRS 16 consists of $3 million, almost unexchanged compared to the last year. All winter crops are currently in good condition. This year, MHP is going to harvest around 350,000 hectares. MHP's spring sowing campaign is almost finalized. Let's proceed to the slide number nine. Meat processing business financial performance remained almost unchanged due to the positive effect of increasing price and optimization of product mix with higher focus on higher margin product, was offset by suspension of Ukrainian bacon operations in the Donetsk region in April 2022. As of today, MHP produced around 1,000 tons of meat processing products per month. Before 2022, we produced around 3,000 tons per month using both company and rented facilities. Let's go to slide number 10. Several words about Perutnina Ptuj. Growth in capacity in Serbia and Croatia resulted in 8% increase in poultry sales year-on-year. EBITDA has increased 30% year-on-year due to the fall of energy and grain prices in E.U. as well as higher price for meat and meat processing products in Q1 compared to the same period last year. Compared to the Q4, price have remained almost at the same level we don't expect significant price changes further in the future. Slide number 11. A few words about our cash flow and liquidity position. Cash flow operation before changes in working capital amount around $100 million. This amount includes payment in February, part of deferred interest payment agreed with creditors at the end of Q1 2022. Investment in working capital was insignificant, mostly due to the fact that investment in grain farming business was upset by low stock of meat and grains at the end of Q1. High investment in working capital during the 2022 was caused mainly by fact a realized working capital while the war in Ukraine is in place. We also see an additional risk of non-reimbursement of VAT in 2023, driven by challenging economic environmental in Ukraine. Total CapEx in Q1 amount around $40 million and mainly related to purchasing diesel generators to mitigate the impact of possible power outages, maintenance and new product development and improvement of production facilities. Regarding the debt, by the end of the period, the company net debt was $1.2 billion. The company paid all deferred coupon on time, MHP remain in responsible partners and have also paid spring coupon. At the same time, we received the approval for prolongation on commitment line from all banks till August, December 2023, second time since the beginning of the war. The operational environmental remains volatile, extremely challenging and unpredictable, including the NBU restriction regarding capital movements outside of Ukraine for the Ukrainian legal entities and individuals. The liquidity position at the end of the quarter was $350 million in cash, mostly in dollars and held mainly outside of Ukraine. Given the current operational environment and significant risk associated with war, we estimate that our minimum safe cash balance at around $250 million. Thank you. Anastasiya. Thank you very much, Viktoria. Thank you. Let me provide you with the current outlook for 2023. At least this is how we see this year going forward. MHP is expected to operate at close to full capacity, subject to any possible direct or collateral disruption or damage to MHP operations or rented storages. MHP has been adapting to the war environment and at the same time experiencing new logistic challenges. I'm talking about recent temporary restrictions bans for exports of agricultural produce set by a few E.U. countries, which we had to face starting from the beginning of the second quarter of the year. This challenge has not been completely resolved yet. With regard to agricultural commodities, prices, we see them stabilized now both for grains, vegetable oils and poultry meat. However, we remain conservative to any positive trends in prices as of today. In general, there is a high level of uncertainty regarding how our next quarter's operations will look like and what kind of financial results this uncertainty will bring to the company. MHP is united as never before to support Ukraine, Ukrainian population and, of course, the whole world to provide food security to the extent possible. MHP team continues to undertake all possible efforts to manage all difficulties and overcome obstacles. We are now ready to start our Q&A session. Team. Thank you. We'll now move to the Q&A. If you'd like to ask a question, please press star two on your phone and wait to be prompted. If you're dialed in by web, you can either type your question in the box provided or request to ask a voice question. We'll now wait a moment or two for the questions to come in. Our first question comes from Christodoulos from Blackbeard Asset. Your line is now open, sir. Please go ahead. I believe you're muted. Could you try unmuting? Let's move to the next one. Our next question is from Anton from Knighthead Capital. Sir, your line is now open. Please go ahead. Hey, guys. Good afternoon. Thanks for taking the question. Just a couple clarifying things for me. Number one, I think, Viktoria, you said, most of the cash is offshore. Can you give us the splits and also tell us how much is at Perutnina Ptuj? Yeah. Hello. Well, hello. Thank you for your question. It's approximately $50 million. $50 million-$60 million in Perutnina Ptuj. Of the non-Perutnina cash is substantially everything offshore? How much is in inside Ukraine? No, outside. In Ukraine, around 10%. Got it. Okay. On the call about a month ago when we talked about 4 Q results, I believe you threw out as $200 million as your minimum cash balance. Now, we obviously had a positive cash generation quarter despite paying an extra $19 million or so in deferred coupons in February. I'm curious why I think you've changed your view from a $200 minimum to $250 million minimum? I'm curious what informs that change. Thanks, Viktoria. Thank you for your question. I told you, I remember that you were $200 million-$250 million. Between the figures and what is very, very important because some uncertainly, what I would like to say because we had some incident with our not our storage, near our storage, due to the missile attacked. We had some incident with any assets at all. Other very important point, because we have some problem with export to Europe. That is why I think that we need to have an. Unfortunately, we are continuing to live and to operate in war. We cannot predict. Potentially tomorrow, unfortunately, it would be very terrible case. That is why we estimate that you must have this amount. You know that we have 26 employees in our company, and we are responsible not just for these employees and for their families. That is why we feel the responsible and not just, and to be responsible, not just the families of our employees. We rent our land from 100, approximately from more than 100,000 people we rent land. That is why we understand that something happened with our facilities because, yeah, this is the biggest risk for us. We need to provide and we need to guarantee, you know, people some level of income. That all makes sense. Just a couple more things. Still thinking $150 million-$170 million of CapEx for the year? Yes. Yeah. Approximately this amount. Yeah. And what's the latest on VAT reimbursement? What? What? Sorry. VAT reimbursement? I believe there's $150 million at stake. Yes. According our budget, this year, accordingly just budget, we need, we think that we should, it is a lot of concern about that, but we should receive around $ 120 million VAT. Sorry. You said $120 million right? $120 million- $140 million. $140 million. Yeah, to be honest, as I told you during the presentation, I have some concern that because in the first quarter, we receive around only $10 million. Around $10 million, yeah. Got it. The final question. What's the latest with NBU with respect to currency controls? Are they working with you? No, nothing changes. No. Completely the same restriction, yeah, for all legal entities and individuals. Yeah. It's completely prohibited to pay NBU. Understood. Okay. Nice job this quarter, and good luck with everything. Thank you. Yeah. Thank you. Thank you, Anton. The next question comes from Feloshi from Higher Ground. He asks, how is the readiness to pay the bond maturing in 2024? Sorry. Please repeat. How is what? Sorry, you'd like the question repeated? Yeah. Please repeat your question. Yes. Yes. How is the readiness to pay the bond maturing in 2024? It's very good question. I understand. It's very good question. We understand that approximately in 12 months, yes, is maturity our bond. We will intend on addressing this issue. No, we understand that it's very important for us, this very important deal. We will intend on addressing this issue appropriately in due course. Thank you. Our next question comes from Konstantin from Aptior Capital. Sir, your line is now open. Please go ahead. Hello. Do you hear me? Hello? Yes. Okay, perfect. My first question is on the pricing environment. Sort of internationally, we're seeing that pricing for poultry is softening. Maybe you could comment on what you're seeing across the markets of your exposure. Do you see sort of pricing environment stabilizing, softening? Like, what's the trend there? That's my first question. Thank you for your question. Regarding pricing environment, as I told, in the first quarter last year, price decreased significantly compared to the Q2, Q3 2022. The first quarter price remains the same level, yeah. I talked about the price of laying Europe and price of whole chicken in MENA region. Our expectation, and we put in our budget completely the same level of the price. Yeah, current price. Yeah. We think that to be honest, we don't see any signal and any reason for increased price. Mm-hmm. What are you- Because you know the price- Yeah. Yeah. You know the price of grain during the just last month is decreasing. Price of gas in utility decrease. That is why we don't expect any increase in price. Got it. In terms of volume, what are you seeing? I think that. Now is the summer region. With summer period is a hot season. Yes, our expectation in the second half of year is in the lower season, price will decrease. Got it. On the volume side, what are you seeing? With, regarding volume side? Yeah I think that we will continue to work at 100% capacity utilization. Mm-hmm. Yeah. We will sell the same quantity, the same volume that we sold in this first quarter, in Ukraine and for export. Got it. Got it. Historically, second quarter is a high working capital consumption quarter. Obviously, we are, you know, in the second half of the second quarter. What are you seeing this year? Shall we expect a substantial working capital outflow in the second quarter? Maybe related to that? I f you could comment on where the cash position is right now. That would be helpful to get a sense of what's happening to the working capital? Yes. We expect that investment in working capital in the second quarter, not so big amount, but it depends of, yeah, as I told previously, it depends on the issue reimbursement VAT. Yeah. Yeah, it is one of the reason. The second that we invest, in sowing, invest money in sowing campaigns. Is the two main reasons why we invest in working capital. Regarding our current position today, we have in account approximately $ 340 million, $ 330 million- 340 million now. $340 million of cash? Yeah. Got it. Yeah. Just on VAT point, VAT reimbursement point, you collected out of $ 120 million this year, you collected $20 million, right? Last year? Like, No, no. you expect to collect $ 120 million in VAT reimbursement. Expect VAT. Yeah, total $ 120 million. Yes, $ 120 million. For the full year? For the full year. So far this year. Yes. Far this year, how much you collected? Yeah. This year we received just around $10 million. Around $10 million. When shall we expect for you to collect the rest of $120 million? The rest of the year. $10 million? Yeah. The rest of the year. Is there any point in the year? Is it December or it's September or when do you think it's gonna happen, and what is it conditional on? No. Yeah, traditional, yes, we, yes, I think that we need to receive this money every month, different part of, yeah, the part of this amount. Yeah. Yeah, until today we received very small amount. No, we expect that in the second quarter, we expect to receive additional maybe $15 million, $20 million. Got it. Finally, just on the sewing campaign. The spring sewing campaign is almost over, I would guess. Mm-hmm. Any outlook for the harvest? You know, what do you expect? Is that better than the last year? It's very good issue, but unfortunately it's too early. Until today is winter crops looks good, now only May. Got it. I'm sorry, just one last point. We saw that the facility in Odesa region was affected by the recent strike. What's the situation out there? I think you mentioned that $10 million of working capital of inventory was affected. Like, any additional color you could give would be helpful. Regarding, I will explain. We keep the approximately 3,000 tons-3,500 tons. Now we try to estimate because what happened there, because our product partially was defrost partially, now we provide very, very deep investigation, all portion of this. After that, we will understand what is amount of, what volume we need to utilize. Now, I cannot say exactly figures. At the same time, I understand that some volume unfortunately will be utilized, but I cannot say. Mm-hmm. Mm-hmm. Got it. All right. Thanks so much for your comments. Very helpful. Good luck. Thank you. Thank you. Thank you, Konstantin. Our next question comes from Ludovic Walter, from Sona Asset Management. He asks, how should we think about your working capital cash consumption this year? Regarding our investment in working capital this year, we estimate this amount. No, to be honest, it's very difficult to predict regarding, I would like to repeat again, it is a big issue with VAT reimbursement, yeah. Total our expectation of not just expectation. Based of our budget, I think that we should get $120 million, anyway, we cannot guarantee that we will receive this amount. That is why, yeah, it is one of the investment in working capital. Exclude VAT reimbursement, our estimation it is approximately $20 million-$30 million. Thank you. Our next question comes from Dmitry Ivanov from Jefferies. Your line is now open. Please go ahead. Hi, Anastasiya, Viktoria. Thank you very much for the update. I guess it's a bit difficult question, but I mean, like, you mentioned that in your budget you assumed prices the same levels as in Q2, which kind of... like if you look at the sunflower prices, I think sunflower prices dropped by 25%- 30% if I remember correctly our discussion. I'm just trying to understand, like, your kind of base case scenario, like status quo scenario. Do you expect like lower EBITDA levels for the groups for the rest of the year? Just if you can give us a bit more color on like EBITDA generation like sides of the business? Like in your base case scenario, that would be helpful, like, my first question. Yeah. Thank you for question. Yes. About our base scenario, our EBITDA? Yeah. Correct. Yes. just assuming like your. Oh, you remember before the war, I would like just mention, before the war, our EBITDA in 2022 was $750 million, around $700 million. That is why I think that our depends on a lot of different reasons. If you base of current situation without if you complete the current situation, I think that we generate our EBITDA will be very close to the last year EBITDA. Maybe slightly higher, but not so significant. Last year we generated $180 million. That is why. What I would like to emphasize, it's very difficult to predict with current situation what potentially can potentially happen. If situation will be completely the same, I think that, yeah. Unfortunately, price of grain very low, yeah. That is why our expectation about EBITDA in grain segment not very high. As I mentioned during the presentation, in presentations that now crushing business and correlation between price of sunflower oil and sunflower seed is not very attractive. Understood. basically you expect Basically, you need to understand. If price of export meat increase by 10% or 20%, yes, we will generate higher. As I told before, I don't see any reason, any signal that price of export meat will increase. That is clear. Basically, assuming current poultry and sunflower prices, you expect similar level of EBITDA generation similar to the previous level year EBITDA. Okay. The second question on this upcoming short term bank loans. As you mentioned, you extended some of the credit facilities to August, December. Yeah. What's your current strategy when it comes to, like if lenders will ask just to repay like we expect just to re-negotiate a new extension or are you ready just to pay them in cash? Just any color would be helpful on this $160 million short term debt facilities. No, we have very good banks. I think that banks is very good our partners. Yeah. I'm sure that we will ask again about prolongation. I think that we can achieve some, well, some result which satisfied both of us. Okay. Okay. Yeah. Is there? Yes. Mm-hmm. Anyway, it is under discussion. You understand? We clearly understand that we prolongate until August and December. Before this deadline, we will have that new round of negotiation. No, you understand. Thank you very much. The last question from me is about this ban on crops and products originating in Ukraine from certain European countries. From like segment perspective, which segment kind of might be affected by this ban? Are we talking about grain segment or like other segments will also be affected? For example, sunflower oil wasn't listed as a banned product. I'm trying to understand which of your segments might or like might be affected by this temporary trade ban from. Poultry segment. ... Certain European countries. Poultry segment because, during the week we could not export in Europe during the around weeks around this. Our logistic cost now increased when we export to Europe. Poultry segment will be affected, I'm just like. Yeah, exactly, yeah. Uh- Logistic cost increased. Okay. Poultry is a product that was also like temporary banned for the. Chicken, yeah. Yeah. Yeah. Yeah. Not transit is also allowed, right? There is no way just to transit, you have just to use other alternative ways just to bypass these countries. Yes. Yes. Okay. That is clear. Thank you very much. Thank you. Thank you, Dmitry. Our next question comes from Federico from Perella Weinberg Partners. He asks, how much debt is sitting in the EOS segment? How much are the unencumbered assets in the EOS segment? Oh, sorry, please repeat question. How much debt in E.U. segment, yeah? How much debt? Sorry. Yeah. No, no. In E.U. segment, yeah. Yeah. Yes, it is European. How much- European. European Union. Yeah. Around EUR 130 million debt. He also asked, how much are the unencumbered assets in the EOS segment? How much asset? Value assets, yeah? Oh, I cannot. Yeah, it is balance sheet, I don't remember. Yes. We will provide you something, yeah. I don't remember the about assets. I know the debt, but approximately maybe three... No, I cannot say. Thank you. Okay. Our next question comes from Clem from Lord Abbett. Can you please comment further on the effects on MHP of various grain import bans and tariffs imposed by European countries? Is it possible to quantify the effects? No. Sorry. The current logistic cost increased for MHP to Europe increased approximately by 15%. If you calculate... I cannot right now calculate, but it is around... No, I cannot calculate. Approximately maybe five... Okay. Thank you. Just a reminder, if you'd like to ask a question, please press startwo on your phone and wait to be prompted. If you're dialed in by web, you can either type your question in the box provided or request to ask a voice question. Let's wait a moment or two for them to come in. We have a follow-up from Ludovic from Sona Asset Management. He's asking, have you drawn on the EBRD facility or is the $340 million-$350 million current cash balance you mentioned earlier excluding any drawing on the EBRD facility? $40 million, yeah. We checked the EBRD $40 million, and this amount include in our liquidity position. Thank you. Let's wait a moment or two to see if any more questions will come in. Team, this is Anastasia. I think we had a nice call today. Pantsos, I think we answered many questions. I would like to thank investors for the questions raised. Of course, if you have any outstanding questions, please email or give me a call and we can discuss them in detail. For now, we would like to thank you and wish you a nice day. Thank you. That concludes the call for today. Thank you everyone, and have a nice day. Thank you. Thank you. Bye. Bye-bye.