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Good afternoon, and welcome to MHP's Second Quarter 2020 Results Conference Call. We are joined by Anastasiya and Viktoria. I will now hand over to Anastasiya to begin the presentation.
Hello, thank you very much, team. Dear stakeholders, good afternoon and good morning. Thank you for joining us today at MHP's conference call. I am Anastasiya Sobotyuk, Director of Investor Relations and International Communications together with Viktoria Kapelyushnaya, CFO of MHP, we will discuss MHP's financial and operational results for the second quarter and 6 months of 2022 as well as current operational environment and expectations for 2022, taking into account the war in Ukraine continues. Today's call is based on information released earlier today. However, during our call, we will discuss our projections and plans based on our assumptions, domestic and international trends, we take into account. We are now moving the Slide #3 of the presentation. I hope you received the presentation. Let me start from the general overview of the first -- second quarter of 2022. The whole situation in Ukraine has stabilized to some extent, although the situation remains highly fluid, and they are booked as subject to extraordinary uncertainty. Macroeconomic situation is completely in red zone with negative trends across all fields. GDP, another significant drop of around 37% year-on-year in the second quarter after a drop in the first quarter of the year. CPI accelerated to 24% year-on-year in August and foreign exchange rate continued to devalue showing 34% devaluation through January 2022. There are a few positive changes, though, due to the arrangement signed on 22nd July by Ukraine, the Russian Federation, Turkey and the United Nations to resume grain output. Agricultural companies are now able to export from Ukraine and more than 100 ships have delivered animal feed, grain and vegetable oil to a number of MENA and EU countries. MHP is planning to use this route to export grains later this year. The Ukrainian Army is pushing Russian terrorist forces out of Ukraine slowly but surely which means that Ukraine still requires international support not to spread the disease across the continent. Although MHP continues to face complex challenges and disruptions in operations, sales and logistics, the company has now been able to restore pulp production in its Ukrainian facilities to almost 100% of the capacity.
Let me now proceed with the company's results for the second quarter of the year. We move to the Slide #5. My computer is a little bit slow. I'm moving the slides now. We are here, now good. Let me start with operational highlights for the second half of -- first half of 2022, driven by decrease in capacity utilization in Ukraine, poultry sales decreased by 12% and reached around 300,000 tonnes of chicken meat. Facing significant challenges in logistics, poultry export from Ukraine decreased by 17% to around 158,000 tonnes with significant share of transshipment made through the territory of the EU to the MENA and African countries. Total share of exports out of total poultry sales volumes decreased to 53% from 57% in the first half of 2022. Financial results for the first half of 2022 are falling. Group's revenue increased by 16% and reached almost USD 1.1 billion with export revenue representing 56% of the total revenue, which was 51% in the first half of 2022, mainly driven by higher export prices for poultry, meat, partially offset by lower volumes. Adjusted EBITDA decreased by 54% to USD 154 million as a result of war disruptions in operation, which led to lower volumes in production and sales as well as significant increase in logistic costs and challenging logistics in general. Net debt to LTM EBITDA ratio constitute 2.75x. Please take into account that first time in MHP's history, we report on more expenses, which were at around USD 50 million in the first half of 2022, mainly related to community subordinations like food and boots, [ fees ] of operations at mitral testing facility in [indiscernible] since March, write-offs of inventories, as of producing the cold storage in March and biological assets as well as salaries to the mobilize employees of MHP who we will continue to support until the victory of Ukraine in this current war. Let's go on to Slide #6 of your presentation. Group's revenue increased by 10%, as you can see from the slide and reached around USD 595 million, with export revenue representing 56% adjusted EBITDA decreased by 60% year-on-year to around USD 111 million with EBITDA margin of 19%, which is significantly down year-on-year because of the war disruptions in reparations. We now go to Slide #7 of the presentation, which shows our financial results by segment for the first 6 months of the year and results from poultry operations, poultry operations, as you know, and see now remained our key segment as usual and during the first half of the year, the group generated the majority of total revenue, 70% and around 65% of the company's net EBITDA. Grain segment generated 5% of total revenue and about 22% of the company's EBITDA. As you know, majority of grain produced we use internally to produce [indiscernible] for chicken. Meat processing and other agricultural operations generated about 5% of consolidated revenue, with 0 contributions to EBITDA. Viktoria will comment the main drivers of this segment later during the presentation.
The European operating segment generated approximately 20% of the total revenue and 23% of the company's EBITDA. Let's have a close look at each business segment, and I want to pass my word to Viktoria to continue.
Thank you, Anastasiya, and good afternoon, everyone. Before the presentation, I would like to highlight that I will talk and walk you through the second quarter results of this year and compare them with the second quarter last year, mainly. So you can see how the current environment and war in Ukraine have impact of MHP operational and financial results.
Let's go to the Slide #8. Let's start from the results in Poultry division. During the second quarter, poultry production volume slightly decreased as MHP has been working at around 85% capacity utilization. Overall, revenue of division increased by 10% year-on-year, mainly revenue in poultry remained relatively stable year-on-year, whereas the revenue from vegetable oils increased substantially driven overall increase of results year-on-year. During the second quarter, MHP average export sales price for poultry meat increased by more than 65% in dollar terms, mainly driven by product mix optimization, product mix optimization as well as substantial international price increase across all markets. Silage price in Europe and MENA, smaller price in [indiscernible], but at the same time, export volume decreased by more than 35% due to the challenges and disturbed logistics because of the war. Price on domestic market in the second quarter decreased by 7% year-on-year in green terms, mainly driven by lower shares in sales of chilled meat as well as product [ meet drastic] change. At the same time, volumes remain relatively stable. Poultry production cost in the second quarter remained almost at the same level in the third quarter, but significant increase compared to the year-to-year more than 30%. Gross profit in Q2 substantially decreased by 21%, mainly due to the problem with logistics and much lower sales volume in export than expected ongoing war. While in the first half of 2022, gross profit increased by 3% due to the exception of low results in the first quarter 2021. Adjusted EBITDA before the [ IFRS 41 ] effect per [indiscernible] In Q2 was 16% lower year-on-year as a result of war related expenses mentioned earlier by Anastasiya. Let's move to the Slide #9. This year, harvest is expected to be good for all agricultural producers. Despite difficult sowing campaign in spring and challenging agricultural operation in sum, taking into account good weather conditions in Ukraine for rapeseed and soya. The company has good yield for this growth this year, use for wheat, corn and sunflower are more than expected and low compared to the last year. At the same time, low grain price and however, low grain price in 2022 season in Ukraine. Compared to the same period last year, it was affected by disruptive and expensive -- and problem and disruptive and expensive logistics of grain in the Ukraine, from Ukraine, despite of high international prices as well as higher production costs resulted. Resulted to a significant decrease EBITDA in H1, below by 80% lower 2022 compared to the same period last year. Slide #10, Meat processing and other agricultural operations segment. Just to remind, at the beginning of April, MHP has decided to temporarily suspend the operation of Ukrainian bacon, partially relocation [indiscernible] To the MHP production facility. As today, MHP continue to produce meat processing products, mainly operating with subcontractors.
Production reduction volume decreased substantially. So the sales volume decreased by 70% year-to-year to around 2,000 tonnes in Q2. As a result of segment EBITDA in Q2 decreased to nil from 70 million, mainly the effect of war and significant disruption in demand for [indiscernible] segment. Please let's go to Slide #11. Following the strategy of poultry production growth and increased several facility capacity utilization in Serbia, in Croatia, poultry production volume of European operating segment in the second quarter increased by 6% year-on-year. Average poultry price increased by more than 30%. Average price of meat processing products increased more than 10%. They trend absolutely in line with international poultry prices. At the same time, our revenue on prior year-on-year by 15% and EBITDA remained approximately at the same level, USD 22 million.
Please go to the Slide #12. It is crucial to draw your attention to cash flow of company in challenging times for Ukraine. Net cash used in operational activity amounted USD 8 million this year in H1 compared to the almost USD 50 million the same period last year, mainly due to significant investment in working capital. In the first half of the year, we invest in working capital USD 144 million more compared to the same period last year. It is mostly related to, first of all, increase in trade receivables for exports of flow and poultry meats to the longer logistics. Secondly, high amount of chicken meat in stock due to disruptive logistics, the same problem. So the change in condition in trade account payable and increase in VAT receivable balance. General total capital in H1 amounted USD 36 million, mainly related to some maintenance topics and some improvement [indiscernible] production facility, some of our projects regarding the new product development. Some words about MHP debt and our liquidity position. As you know, around 90% of MHP total debt by euro bond. At the end of June, MHP liquidity position was USD 220 million in cash, mostly in bond because of the war in Ukraine MHP is facing significant challenges to address the new credit line. At the same time, the minimum liquidity position, the company see it appropriate to continue it's business as usual is a minimum USD 120 million, USD 130 million. Weight of current situation, despite certain restrictions set by National Bank of Ukraine and general [indiscernible] Ukraine because the war MHP expects to pay its postponing semiannual, bonds coupon in full and on time. And now I give the floor to Anastasiya to provide you the outlook.
Thank you, Viktoria. Now the first half of the year with full of challenges, instability and disruptions, which the company managed to overcome this from our customer partners in different parts of the world, our strong brave and ambitious employees and management team. Looking forward, the company understands that although the situation in Ukraine will remain highly uncertain while the war is ongoing. The global Ukrainian operations and asks continue to retain gradual towards normal level of activity. Results in the second half of the year should be influenced primarily by customery market factors.
When it comes to Poultry business, we expect some sort of downward correction in global poultry prices in the coming months, although this may be influenced by varying market factors in different regions, such as [indiscernible] related supplier constraints in the EU but possible excess supply to some Middle East markets. While MHP's vertically supply chain has protected, it's from some extent from global inflationary pressures, increased logistic costs are expected to continue into 2023. Grain market remains volatile. Grain prices are likely to remain high at least into 2023 internationally, reflecting ongoing global supply constraints due to climate change effects. As Viktoria highlighted earlier, this year, harvest in Ukraine is going to be good despite all difficulties of the war time. However, we do not expect significant development in grain price growth, especially in Ukraine, as soon as logistic costs remain high, and there is rather fragile stability in grain exports. At the same time, [indiscernible] will continue its further development in the Balkans, supported by favorable market environment. And finally, what I would like to say -- and as Viktoria mentioned, MHP expect to pay its forthcoming semiannual bond coupons in full and on time, taking into account the uncertainties of the war, it should be noted that any potential total actions by National Bank of Ukraine could be -- could affect MHP's future bond coupon payments. Thank you very much. We are ready for questions to ensure that all participants on today's call have equal opportunities. Please follow the one participant, three questions. Thank you very much for cooperation in advance. Team, we are ready for questions.
Perfect. Thanks, Anastasiya. So we'll now move to the question-and-answer section. [Operator Instructions] So our first question comes from Robert Jones from Insight Investment Management. Yes, we can hear you, Robert.
So I just want to understand on the coupon payment. Obviously, you deferred the spring payment and you say you're going to make the autumn payment. So does that mean you intend also to make the spring payment within the 270 days of the standstill that you have?
Sorry. Could you please repeat the question because the connection is not so good. Yes.
I just wanted to understand the coupon that you have deferred? Do you intend to make that payment within the 270 days of standstill you have? Also as well as the coupon is coming due?
Anastasiya, sorry, did you catch the question.
Yes. I heard the question. So the question is -- can you hear me?
Yes. Yes.
So the question was about the coupon payments, which we [ hold ] by 270 days, right? So who I understand the question is what is our plan as with regard to these coupon payments?
Your question is about the net payment, not about the payment -- coupon payment. September, November, your question about our winter payment. So based on -- if you -- based on current situation, yes, we, anyway based on current situation and we would try to continue to pay coupon but at the same time, we have some restrictions from National Bank. This is now a national bank allowed to us to pay only interest payments, not just MHP for all companies from Ukraine only interest payment until the 10th of August. I hope the national bank will continue and very low same normalcy. And I hope, yes -- we hope the situation will continue. But unfortunately, we cannot guarantee. You understand that we live during the war and part is very difficult to guarantee what we will have is continued decline.
Our next question comes from James Barry from Gramercy Funds Management.
I just want to follow up on that on the previous question. The 2H coupons, your intention is to remain current on those, but the 1H coupons, what would be the rationale to delay paying? So I think it's promising from the set of numbers that you have that you have USD 223 million in cash. Why not simply to pay those coupons now? What will be the rationale to delay? I understand you say that there is NBU regulation that may prevent that, but that's not necessarily the case for other Ukrainian corporates that have paid coupons and have remained current on their debt obligations.
Can I ask a clarification question, Viktoria. Can I -- let me clarify the question. So you're asking about the [indiscernible] coupon payments and you're asking...
Sorry, I'm not clear. What your question was?
Understand that now we've yes, it's a total presentation in current situation. We have a lot of problem with new credit line [indiscernible]. To be honest, it's completely impossible to attract EU credit line or not just by MHP, even for MHP. And our minimum liquidity position was this minimum USD 130 million and we don't know what will happen and potential, it can be happened in with our assets and with our facility. That is why it is minimum. We need to keep it. In the near future during the month, we will pay USD 50 million our [indiscernible] our coupon, yes. And we -- right now, we do have a lot of money for payment all coupons, you understand, yes. We understand how we take -- yes, the coupon yes. Or maybe I did not take your question. I don't think that USD 200 million is so big liquidity for MHP with current situation when we cannot attract any cred, any loan.
The CapEx intensity is associated with the 2 harvest, right? The Autumn harvest has now been complete or is in the process of being completed that you're going to have reasonably strong visibility on what you can pay in the next 3 months. It's just the grace period, obviously, clearly, is the end of December, so why not pay sooner? We should have reasonable visibility from here.
I'm so sorry I have to translate it to Victoria because the connection was not that too good. When it comes to [indiscernible] the impact on lower CapEx more or less at [indiscernible] to build upon making cash is that we have now a postponable visibility [ Foreign Language ].
First of all, based on current situation and how -- now we see that our profit for next 12 months. We understand that we will pay next Winter coupon. But what my worries, biggest worries because we live during the war and potentially, it can be changed at any time. This is why, yes, we don't have that, yes as I said to you now we have the harvest, but what you need to understand, the biggest part of the harvest, we can feel informally, and we will consume not in the fourth quarter, some flower seed, corn, we will consume in total, it can work in money during the fourth quarter and 9 months next year because we sell off only grain which we sell usually only rates and part of wheat...
But you remain confident that you will pay the winter coupons prior to the end of the end of the grace period data at the grace period.
[ Foreign Language ]
Yes, very important question. Based on current situation, I would like to repeat a lot of times, but nobody knows what will be tomorrow, not in 1 month. Sure.
So our next question comes from Erica Ive from MetLife Investment.
Basically, I got a question on cash of USD 222 million. How much of this is held the Slovenian subsidiary level? And can this cash be moved to the parent company, if needed? Yes, yes. But the second part, what is the second part of this issue [indiscernible].
[ Foreign Language ]
Approximately total cash in Perutnina, it is around USD 100 million yes, slightly, yes, very similar figure may be slightly lower. We can't send some amount, but not so significant because at the same time, Perutnina has restriction, and that advises amount only maybe USD 20 million.
Sorry, excuse me, can you repeat? So how much -- what are the restrictions in place? How much can you send up to?
Up to 20.
Up to 20. That is -- how that is established? Is basically fixed for to be 20% of what is usually held on the Perutnina level? Or is the USD 20 million is a hard figure. How calculated [indiscernible] ? Is it in a hard amount that you apply always or just a proportion of how much cash inside at the subsidiary level?
[ Foreign Language ]
Yes, the same the 20%, 20 million on completing around USD 20 million, because Perutnina has some restriction for payment Perutnina has a loan, yes, a syndicated loan and had some restrictions to payment to the parent company. That is why this approximately amount which we can take from Perutnina around USD 20 million.
And then in terms of the USD 24 million EBRD loan, do you expect this still to be drawn in October.
No, no, no. A little bit on we received in the -- in July, in August.
From liquidity.
Yes.
Sorry, should I repeat. Basically, have you already draw down the liquidity, have you already used the liquidity? Or is it still there the loan?
No, albeit to this loan for liquidity position.
Have you used it or not yet?
Not yet this liquidity, yes we took this loan took this loan and, yes, and [indiscernible] from subsidy and now we use for some of our grain operations.
So basically, you've already used it?
Yes.
I thought actually that you would have used it in October in conjunction with the harvesting campaign -- sorry, the sowing campaign, the new sowing campaign.
[indiscernible] was restarted, yes, because in the August, we started to bought some utilizes...
Fertilizers and plant protection materials.
So no, no plant -- [indiscernible]
So basically, you [indiscernible] please go on.
Yes, we bought -- yes, you understand the price of [indiscernible] an I didn't -- bringing utilizes the green.
Fertilizers. Fertilizers.
Fertilizers, sorry, sorry. [indiscernible] Price of fertilizers increased significantly. And in August, in September, at the beginning even in -- by the end of July, we would fertilizer, yes, fertilizer and we use this loan for [indiscernible]. To understand price for fertilizer increased significantly and in August, in September, at the beginning even in -- by the end of July, we bought fertilizer and we use this loan for this.
Okay. And last one is before you mentioned the minimum liquidity position, if I understood correctly, is it estimated USD 140 million in total, was my understanding correct?
Sorry. Please repeat how much.
130. Basically what...
130, yes, yes, yes. You're correct.
Okay, 130. Okay. And that includes how much to be held at Perutnina?
No, no. I talk about weeks maybe my mistake, you're completely right. So we need to say we, need to say the not join this separately. For MHP for Ukraine and MHP, we need to have a minimum of USD 120 million. Looking at a position with current situation, yes.
Okay. MHP parent. And then plus...
No MHP Ukrainian companies, yes.
Thank you. Our next question comes from Antonio Gomez from Ninety One.
I was wondering if you could kind of give us an update on the harvest so far and how you -- whether or not you've been able to export any of the grains that you harvested to date? In your last update, you mentioned that your spring crops had already been harvested. So it would be good to kind of get some color on how that's gone and whether you're generating cash from grain as well as poultry at this point?
Well, I think it was a question regarding our grain regarding our winter group. Yes, correctly we gathered to winter crops grain rates and to wheat. Yield is not so bad, even it's good regarding trade. We now exporting grain, but very, very slowly. Yes -- No, because you know the problem with export grain. And we suppose that we will export grains until by the end of this year. Regarding wheat we will export by the -- into the fourth quarter. The small part and may be because price now is not so good, especially for wheat. It may be part of them but part of them will we use internally, yes, and we try to export in the fourth quarter and maybe some rest of them, some part of them, we will export next year. But anyway, we understand how important money for company and we try to export this winter crops this year.
And that cash, is it going to be -- are you going to be able to get it out of the Ukraine? Or is it going to have to go via the Ukraine and hence be restricted?
No, no. We will receive cash out of Ukraine, but at the same time, we have obligations to send cash in Ukraine, we understand we have obligation to send this cash in Ukraine. We cannot keep all cash out -- no, we can keep for some period of the time. But anyway, we must return cash in Ukraine because the export from Ukraine.
Okay, is it 100% or less?
Almost 100% because you understand that [indiscernible] pricing, in different countries and almost all but exclude very minimum.
And then my other question was on you cash flow. Firstly, on your CapEx, you did about USD 35 million in this quarter. That gets you to about USD 65 million year-to-date. What are you budgeting towards the end of the year? Is it going to slow down in the second half?
A little bit maybe slow down, but not significant because you understand that we have been a very big part of our CapEx is the maintenance CapEx. And so the one -- we cannot stop and not invest money in maintenance, yes, because, yes you have to understand, yes this year. And we have done projects in Perutnina for improving commerce efficiency here...
And my final question is on your working capital position. Your trade receivables extended because of the longer supply lines, as you mentioned. Has your working capital position now stabilized at the level that it reached at the end of the second quarter? Would you expect receivables to increase or any other working capital line to stay quite high relative to history?
Now regarding working our investment in working capital, yes, I think this, yes, we invest more in the second quarter. I don't expect any additional investment in working capital in the second half of the year.
We've had a few text questions just asking for some additional clarity on the liquidity. I know you've discussed this already, but do you want to maybe take something else, for example, one caller is asked if that's sorry, go on.
Tim, I think I can take text questions separately. And I respond by email, if you don't mind?
Yes, no problem at all. So we've got another voice question [indiscernible] From Dragon Capital.
I have a follow-up question on the working capital. If I understood correctly, is that company does not expect to invest more in working capital in the second half of this year?
Yes. You're right.
And another question would be, if it's possible to ask what this company's current liquidity.
Our current liquidity position around 250.
We have a question from Daniel Zaczkiewicz from Barclays.
So just on the logistics. You mentioned that you have increased production back towards 100% capacity utilization. Do you think you will be able to also increase exports? So we'll see more of a recovery in exports through the second half of the year?
Another question on working capital. So just to clarify on the trade receivables, the increase in trade receivables, that's purely due to the change in the nature of your sales and the logistics around it rather than difficulties with payments from customers?
Now again, you correctly right. If you speak about the second -- your question regarding our investment and working capital regarding trade receivables, I suppose that we in this second by the end of the H1, we invest now in trade receivable enough demand.
Yes. And regarding -- and please repeat the question about export. Yes, regarding our export may be your question is about increase our meat exports, yes, your question about export mix, yes?
Yes. Just whether you think the logistics are now improving? Or do you still have difficulties?
Anyway, it is difficult, but at the same time, we try to increase our exports. If you speak our export in the third quarter compared to the second quarter, our exports in the third quarter is high. Yes, is higher because especially in April, yes in the fourth quarter, you may understand April, it was -- our current export is the higher than average export of the second quarter. And we try every month, we try to increase our export.
So the next question comes from Kyle Kneisly at Knighthead Capital. Please go ahead.
I wanted to confirm on the NBU approval. If I heard correctly, you have approval until August 10, but I'm confused as to how you can pay coupons after August 10? Or do we need a new approval?
I will try to explain current situation. It is not just some personal approvement from NBU only for MHP. What NBU, it seems to me 2 weeks ago, adopted new document, which allow -- so all resident, all companies from Ukraine to pay interest payment abroad, we share this company [indiscernible]. From the 24th of February until 10th of August. You understand this point, yes.
And we can pay this amount of interest rate only due 20% every month. And based of the current situation of based of documentation and normative base, yes, we don't understand how, not MHP, all companies in Ukraine can pay following interest payment. [indiscernible] This is why I told that we have some restrictions and some unseen in this issue because only, only companies can pay interest, which company might pay before the 10th of August.
So for the coupon on September 19, will you be able to pay that with the current NBU?
Yes. Yes.
So for all -- for all 3 bonds, you will be able to pay the next coupon via the NBU approval?
I understand your question, yes. This coupon, I understand, break of -- we will pay from our cash, which we keep in -- not in Ukraine.
Understood. So the 215...
Yes, understood. I will explain, yes. What NBU allowed to us. But at the same time, I will explain but at the same time this coupon, we'll pay right now not from Ukraine.
Okay.
But we understand our strict obligation. We have before ongoing quarter.
Okay. So future coupon payments with cash from Ukraine will require NBU approval?
Yes, not just for MHP because I'm sure that our national bank, we all know on some permission for different companies and I understand that our national bank will see situation with currency trade balance on total balance and we'll issue some new documentation, which will allow to pay.
Understood. Can you clarify the 20% per month element. You mentioned 20% per month?
Yes, based on the current recommendation, yes, the company cannot pay 1 month or full amount, only 20% of whole amount.
Of the cash?
Yes.
So of the Ukrainian cash, you can only use 20% of it on a monthly basis to pay interest.
Yes, yes. It's for the voucher paid 100% during the 5 months, yes.
Okay and then, let's see, how much of the USD 215 million current cash balance. How much of that cash is in Ukraine?
No approximately 20. Yes, 20% is...
About USD 40 million.
And -- but at the same time, 40% of them in Perutnina? Are there restrictions, yes.
Okay. So 40% -- 20% of 200, so USD 40 million in Ukraine. USD 40 million is in Slovenia and the remainder is in Cyprus I assume?
No $100 million in Slovenia and rest in abroad, yes.
Okay, okay. And then my last question on the working capital. So you've made a significant investments through June. For the second half of the year, how do you forecast cash flow and will there be a release will working capital be a positive cash figure for the back half of the year?
Yes, I understand your question but last year, we understand it because it totally yes. At the same time, yes, you're right. You're right. I suppose that in the second half of the year, we will have investments in working capital at minimum USD 50 million. At the same time, it would depend on a lot of different issues. One of the biggest issue is the issue regarding logistics.
Okay, so we have a USD 180 million investment made in the first half, and that should come in as cash in the second half?
The investment to USD 150 million, yes.
We also have a question from Konstatin Fastovet from Adamant Capital.
I have two technical questions and then one larger one. Maybe let's just go one by one. So the first one, so I've noticed that over the past few quarters, there is a difference between export sales volumes. So if we sum export sales in the domestic sales volumes, we don't get the sales volumes to third parties. They're like a 2% to 3% difference. Could you say what does this due to?
I did not catch please repeat what is the difference or different...
So we could take export volumes from the table in the financial segment [ Foreign Language ].
I will -- if I understood you correctly, you said that our total sales less than our production -- this year...
No, no, no. The other [indiscernible] export sales volume -- domestic sales. [indiscernible] Total sales volume [indiscernible]
Okay, Konstatin. We will explain you our correctly on figures. Yes, some technical issue, we will explain you.
Yes, I was wondering about that. Okay. Another sort of technical question, but I guess less so -- can you such this...
[indiscernible]
If we look at the EBITDA margin in the second quarter for the grain growing operations but excluding IFRS 41, so basically a cash EBITDA, right? I get a really high EBITDA margin in cash terms for this quarter. It's like 90% almost or something. So that seems abnormally high to me. Could you comment?
Just in your content, I cannot understand my business, I understand the English, yes, I'm not problem, but we need to calculate. I think that we need to organize a special conference call with you because all our EBITDA in the second quarter mostly consists of IFRS 41 standard and 41 standard noncash.
Now that's clear, that's clear. But like if you...
I understand in the second quarter, we saw some grain. It seems to me for USD 20 million in revenue. I understand that in the second quarter, we sold to export our grain for USD 20 million.
We can do it either a call or email. And then just finally, just one sort of an outlook question. Could you so -- could you maybe give a bit more of an outlook of where you see of where you see prices for poultry going domestically and abroad? And also, where do you see cost? Do you see costs more or less stable in the coming 2 quarters? Or do you see some sort of an increase in them?
Regarding -- I understand the question. I think this of course will be at the same level because we understand the price of gas increased, utility increase, but at the same time, I think that price of will be maybe slightly low, maybe the same, okay, we will see. But our expectation about price, about post will be slightly -- maybe maximum higher, but not so significant. If you pick up in dollars first of all, dollars in Ukraine is difficult. We expect that cost will be the same level. Increment may be higher by 10% by do. barter, which we see right now, the price and export market now decrease everywhere, everywhere in EU. Price of small chicken in MENA, unfortunately price of meat decrease is minimum decrease compared to the second quarter, minimum by 10%. It depends on part, depends on region, minimum by 10%. Maybe you speak about Ukraine, in greenness store price compared to the second quarter slightly increased, but only in green store, do you understand if you calculate in dollars and you will see because dollars increase current evaluated what additional much 20%. And in dollars, unfortunately, price decrease in Ukraine.
So basically, EBITDA per kilo is going to go down over the next 2 quarters, for sure?
Yes. Now I think about the trends what I see in September and in fourth quarter. In July, you are with the situation was slightly better, more close to the second quarter. But if you speak about the fourth quarter, yes.
We have a question from Ksenia Mishankina from Loomis.
We'll move on to another question. So we have a question from Raul Chophra from Caspian Capital.
Can you please confirm if the current cash number is USD 215 million or USD 250 million? It's had to hear.
Yes, 250, 2-5-0.
Got it. So and of that, we have 40 in Ukraine?
Yes.
100 in Slovenia?
Yes.
And the rest in Cyprus?
Abroad.
We have a follow-up question from Robert Jones from Insight Investment Management. We also have a question from Constantin Chalabala from Apple Capital.
Could you please clarify what was your energy bill for 2021. And then sort of when we think about kind of cost for 2022 for the first, let's say, 8 months, how much they are up year-to-date. And then if you have any sort of hedging in place at the moment?
Now, if you talk about the price of energy, special gas price, we are the more compared to the more than exceed to 60% Yes. I cannot say the liquidity, but increased significance.
What was the dollar amount of energy costs that you paid in 2021?
Dollar amount in part of quarter production or price?
Both in the -- so I could see fuel costs in the SG&A. But then what I can't see is the cost of fuel in the cost of production. So if you could concern that, that would be helpful.
But your question about fuel or about gas, electricity...
It's both, both. So all energy cost.
All energy cost, approximately 18% of total our cost. Ultimately to speak about investment, maybe approximately not [ 80% ]. Now it is very approximately..
Sorry, could you, could you...
[indiscernible] total our cost, yes.
So 20% of all your cost...
No. Approximately, yes approximately, yes.
Okay. And those 20% are up 60% year-to-date, right?
No, no, no. I talk about No, no, no. I talk about 20%, I talk about our current [indiscernible] that approximately now energy was approximately 20% per Q. In previous year, last year ago, it was around 14, 15 approximately. Because if you think about the electric, price of electricity year-to-year increase also significant, especially if you compare the price of electricity, H1 to H -- in the same period last year. What we increase price of gas and fuel.
Got it. So for me to get the dollar amount is I have to basically take EBITDA, deduct revenue. So I get your cost load. Then you're saying that at the moment, 20% of that cost load is energy related, right? Is that...
Approximately, yes approximately. I just to say exactly, yes approximately.
And then you're not doing any hedging at the moment?
No, I cannot even imagine hedging in Ukraine.
And then in terms of access to internal [indiscernible] energy, do you have any or you're reliant on third parties only?
No, we have internal generation [indiscernible] gas internally. And the proximately may be, I cannot say exactly 15%, maybe 15%, 17% of total -- our managed internally in Brazil, but out sell.
So 85% comes from the third parties, right?
Yes.
How do you think about sort of access to electricity and broader energy at the moment? Do you see any disruptions in that? Or it's business as usual?
Until today, if not a lot of disruption, but potentially and maybe we expect it to long...
And do you have any sort of contingency plans in place in case of disruptions because the business model is really dependent on the continuous access to electricity or gas?
Yes, yes...
Got it. Do we have to think about it at all? Is it something that you care...
[indiscernible] Provide, yes, I think you for your question. We're not just thinking and we provide some projects, and we try one of the our most important our top are to decrease consumption of energy special electricity, yes. And yes, in our CapEx today include, yes, the biggest part of our contracts, if you think about different projects is the project with related to improved our energy efficiency. Yes, it is not just this year. It's not just happened this year. We -- yes.
And we have, I think, one final question from Dmitry Ivanov from Jefferies.
I have three questions. Apologies, some of them are kind of elaboration clarification. But the first question is on the debt maturity profile. I think like in February 2023, you have to repay USD 140 million in bank loans. It looks like it won't happen given these current NBU restrictions. Maybe if you could give us any color on the kind of situation with bank lenders. Have you started like any negotiations with regards to prolongation of those credits? Because again, it looks like you won't repay this USD 140 million in February 2023. So that's like my first question. I'll ask a question by question.
Yes, you completed it, right. You know our debt profile very well. Yes, exactly in February, you're completely right, we need to repay USD 140 million. Now, we provide different negotiations with our bank but until today, we did not know.
And this would say you will come to -- you'll get this -- we'll get started closer to maturity, I guess, right? So Okay.
Yes. You complete the right.
So the second question actually on this grain deal, and apologies if someone already asked this question, but your winter campaign is already done, and you have certain inventories crops. As we discussed with you previously, there are certain limitations on the capacity of vessels and et cetera. But given these inventories in place and given like the current pace of exports from Ukraine of crops, how long will it take the company to export the current winter crops inventories? Are we talking about like several months?
Like or kind of -- I know this is a kind of future question because this grain deal is due to be renewed soon. But in what period of time you expect to export the current inventories from the winter crops outside of Ukraine, given what you observe now with a grain deal.
First of all, I would like to emphasize that winter crops, it seems to be around 20% and maybe less of total our growth of total our grain because only grain there and to wheat. Based on current situation and logistic problem, yes, I think that rates we will export restart what is good, we have to restart exports, right? And I think that we will export grain it until by the end of this year. Then the same situation with wheat may be and some part of wheat, we postponed and maybe 20% or 25% or wheat or maybe even 40 45 wheat for next year.
In terms of the volumes, I was talking about like is it possible to quantify like half a million tons in crops in inventories.
Yes, I will explain. I think now we despite approximately 80,000 tonnes. And this regarding [indiscernible] regard we to the wheat to 100 this year. Yes. Yes, but what is very important, we are part informal the balance approximately around 40%, we consume in turn.
So just, just wheat...
With the 9 months during the fourth quarter and 9 months year...
Sorry, just to make it clear, you have like approximately 240,000 tons of inventories like crops and approximately 40% expected to be consumed internally and 60%...
We speak now, we speak about winter crop. Winter crop is rate as gray -- and wheat I took out only wheat, wheat produce internally.
Okay. Understood. So my last question on this National Bank of Ukraine policy that explicitly ask you just to repatriate cash back into Ukraine from exports, right? You mentioned that approximately USD 40 million in cash in Ukraine, USD 100 million [indiscernible] and the rest offshore abroad. How much of this cash, which is a broad offshore, you have to repatriate back into Ukraine according to this NBU regulation like, so how much of it like has to be sent back to the country out of this like cash that you have mentioned?
Approximately 90%. More than 90%.
90%.
Yes. More than 90%.
So 90% of cash that you mentioned, which is either [indiscernible]...
No, no, no. No. [indiscernible] 2 is a separate story. It's not is a separate story you also have some restrictions Yes. Regarding a wise about $100 million, to 90%. We not [indiscernible] Ukraine. Is it like of the right now understand right now in some period of time.
But there is no kind of definition of or no deadline? So the NBU regulation just asks you to repatriate it back. So without any kind of precise deadline.
Reach, yes. Your question is about how many days, yes.
Yes, how many days you have to repatriate it back, it's like...
The 100 from the export date.
Understood.
From Ukraine.
Thank you. So there are no more voice questions. Just a reminder, all text questions will be forwarded to the MHP team following the call. So I'll now hand back to Anastasiya and Viktoria for closing remarks.
[indiscernible]
Yes. Thank you very much for everybody. Yes, Goodbye, everybody. If you have some [indiscernible] and to me, we answer for them. Thank you. Bye.
That concludes the call for today. Thank you very much, and have a nice day.