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Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, thank you for standing by. I would like to welcome you to MHP's Fourth Quarter 2020 Results Call. [Operator Instructions] The format of the call will be a presentation by the MHP management and IR team, followed by a question-and-answer session. [Operator Instructions]. So without further ado, I would like to pass the line to MHP. Anastasiya, the floor is yours.
Thank you, Tim. Thank you. Good afternoon, and good morning. Thank you for joining us today for MHP's conference call. My name is Anastasiya Sobotyuk, Director of Investor Relations. And on the call today, we will discuss MHP's financial results for the fourth quarter and 12 months of 2020.Today's call is based on data and information released earlier today, Q4 and 12-month 2020 press release and annual report accordingly. However, during our call, we will discuss our projections and plans based on our assumptions and strategy. Please take it into consideration. Together with Viktoria Kapelyushnaya, CFO of MHP, who will present you the financial and operational results of the company in general and by segment. And after the presentation, we will be glad to answer your questions. So I think we're ready to start. Let's move on Slide #4 of your presentation. So first of all, let us look at the macro environment. We all know that the environment was very challenging during 2020. And I have to say that MHP successfully managed to go through all challenges of 2020 and contrary to industry peers in the world during and due to COVID-19 pandemic, we didn't stop our production. And apart from a 2 months' period in the first quarter, when some export markets were closed due to avian influenza, we continued to operate at full capacity as a result of a strong employees' commitment to the company and professional management team. When we look at the macro environment or environment in Ukraine, we can see the real GDP in 2020 fell by 4% after 4 years of growth. The government predicts the growth of the Ukranian economy by 4.6% in 2021, taking into account positive trends in GDP since the second half of 2020. Meanwhile, Ukranian's annual inflation in Q4 2020, accelerated to 3.8% year-on-year, being at very low levels actually during 2020, as you can see on the diagram on this slide. This decrease was mainly driven by COVID-19 crisis as consumer demand for different products decreased significantly and remained quite weak. During 2020, Ukrainian hryvnia devalued by around 16% year-on-year as a result of economic instability due to COVID-19 in the world. Let's get back to the company's results, and we go on Slide #6 of your presentation, key financials for the reporting period. So 2020 dealt us the perfect storm, a global pandemic, several outbreaks of avian influenza in Ukraine with adverse consequences [indiscernible] for MHP and adverse weather conditions all sat against the backdrop of unprecedented global uncertainty. However, MHP took this as a right for opportunity. We continued with the culinary transformation of the company and focused on integration of Perutnina Ptuj into the group and group's efficiency. And now both strategic cost optimization initiatives were implemented and significant modernization investments made focusing on increasing capacity at PP, improving working conditions at PP and improving animal welfare and wastewater treatment standards in Slovenia, Bosnia and Herzegovina.Despite the challenges mentioned above, our annual financial performance was robust. With MHP's revenue decrease by only 7% year-on-year, constituting around USD 1.9 billion, mainly due to the lower result in grain growing segment, driven by almost 30% decrease in harvest year-on-year.Export revenue was around USD 1 billion, 14% lower year-on-year and mainly adversely affected by significantly deteriorated situation in export markets. Export revenue decreased from 58% to 53%. Adjusted EBITDA decreased by only 10% during the year to USD 340 million, driven mainly by a decrease in the poultry and related operations segment and partly positively offset by an increase in the grain growing segment and the European operating segment. Adjusted EBITDA margin remained stable year-on-year at around 18% and due to the resilience of our business model and the successful execution of our strategy.Let's look at MHP's financial results in greater details and by segment. Next slide, #7. Viktoria, can I continue, please?. As you can see from Slide #7, and you can see that's on the table here, contribution to MHP's revenue, poultry and related operations, input was almost 70%, and from the European operating segment almost 20%. At the same time, poultry and grain growing operations contributed the most to the company's EBITDA, 57% and 28%, respectively. Meat processing operation and other agro segment contribution still remains the lowest, both to the revenue and EBITDA of MHP. However, with the prospects to increase taking into account current transformation of the company and the culinary strategy implementation. The successful integration of Perutnina Ptuj continued in 2020 with PP contributing around USD 335 million to group revenue in 2020. Adjusted EBITDA increased by 26% to USD 53 million. And despite the challenging situation in 2020, PP demonstrated strong resilience with an EBITDA margin of 16%, one of the highest margins amongst industry peers, demonstrating the success of our management team at integrating, managing and improving efficiency of processes of a business outside Ukraine.So now I think we are ready to have a closer look at each business segment. And you can see that on our next 3 slides. Here I pass the floor to Viktoria. Thank you, Viktoria.
Thank you, Anastasiya. Good afternoon, everyone. Let me give you more color onto our poultry segment performance, Slide #8. Production volume of chicken meat remained stable year-on-year and despite all the challenges. Again, we never stop production during the pandemic, even for a single day.Since the second quarter of 2020, all MHP's poultry production facilities in Ukraine have been operating at full capacity again after temporary production decrease in Q1 2020. Despite difficulties of COVID-19, sales volume both on domestic and export markets grew by about 5% compared to the previous year. An increase in export sales was driven by a significant increase of sales to MENA region due to high profitability per 1 kilo and more favorable market environment compared to the other region. This growth was partially offset by decrease in EU sales.Total revenue in poultry segment decreased by 5% year-on-year, driven mostly by decreased price of chicken meat, partly offset by increase in sales volume. Export price decreased by 6% in average, while the biggest decrease in price was on selling in Europe and worldwide quarter prices. However, price in MENA region are higher and very attractive. Meat price on domestic market decreased by 8% in [indiscernible] and by 14% in [indiscernible], mainly affected by global COVID-19 pandemic and avian influenza in Ukraine in Q1 last year.Since the beginning of Q2, 2020, price in Ukraine began to recover and reach in Q4 at the level of -- this level of Q4, 2019, in [indiscernible]. In last quarter Q4, we placed additional challenges of increasing by 25% poultry cost indoors as is the result of unexpected significant growth of grain, protein price after bad harvest in Ukraine and then Europe. New harvest price of corn, maybe, as you know, more than 60% compared to the last harvest.Consequently, market price of chicken in Ukraine began to increase, starting from December 2020. As of today, the increase of chicken price compared to December 2020, around 13%, 15%. We expect further growth of price of all types of meat to compensate cost increase in Q2 this year as well. Financial results in poultry segment in Q4 is MHP's historical [indiscernible] record. Substantially increased poultry production costs, while prices have only slightly started to recover before year-end.Gross profit of the segment in 2020 decreased by 20% to 30%. Adjusted EBITDA before 41 standard effect per 1 kilo was $0.3, which is by 25% lower compared to the average of 2018, mainly due to decrease of chicken meat price and increase in cost in the fourth quarter.Let's move to the next slide, #9. Unusual hot and dry weather condition in the final weeks of growing season last year, particularly in the central region of Ukraine, Cherkassy and Vinnytsa, have led to significant lower yields across most of crops compared to the 2019 yields. At the same time, due to the diversification of MHP crop land across Ukraine, MHP's average yield remained above the average in Ukraine.Corn yield was affected the most, being the lowest in our history, especially in Cherkassy region with terrible weather, 3.3 tonnes per hectare while in some regions, for example, yield remained relatively good, higher than 2.6%, at the same time -- sorry, 8.6%, yes. At the same time, in 2020, we have given better than usual yield in west region of Ukraine. Negative impact from lower yield of crops was offset by significant increase in grain prices. Thus corn price increased more than 60% year-on-year. External grain segment revenue last year amounted to $134 million. The decrease in revenue was mainly due to the lower volumes of crops sold last year as a result of weaker harvest.EBITDA, net effect of IFRS 16, was $97 million, by 62% higher compared to the previous year as a result of higher prices. EBITDA per hectare reached $272.Lets proceed to the Slide #10. Meat processing and other agricultural business performance was relatively stable. Volume of convenience food production grew slightly by 3% during the year supported by continuing new product development program. Meat processing product volume decreased by 8% last year, mainly in traditional store segment. We expect to change volume dynamic to positive sign this year following the wider range of new product introduction to the market.Segment revenue in 2020 remained materially unchanged and amount to $144 million. Adjusted EBITDA amounted to $20 million, remained at the same level compared to the previous year, supported by good results in milk business. Let's go to the Slide #11. The advantages of strong brand of Perutnina as well as increased focus on meat processing product have made it possible to increase sales volume of European segment despite coronavirus challenges. Following the [Technical Difficulty] product sales of the European operating segment, last year increased by 5% and 9%, respectively, compared to the previous year. Average poultry price decreased by 6%, mainly due to decreased price in Bosnia average price for meat processing product, last year were relatively stable.European operating segment generated $335 million revenue and $53 million EBITDA, net IFRS 16 last year. Adjusted EBITDA increased by 20% year-on-year, mainly due to increased capacity and increased production, cost efficiency. The management is very satisfied with results that Perutnina showed. We have improved EBITDA over the last 2 years almost by 60%.Please go to the Slide #12. Few words about our cash flow and liquidity position. Cash from operations decreased mainly in line with decrease in EBITDA and additional impact was due to the change in fair value biological assets and agriculture produce, which represented noncash adjustment. Net cash from operating activities amounted $71 million in 2020 compared to $502 million previous year, mainly due to the change in working capital. Use of fund in working capital during [Technical Difficulty] is around $120 million.Regarding debt, by the end of the period, company total debt was $1.5 billion, and net debt around $1.2 billion. 99% of total debt is long-term debt, about 94% of which is eurobonds. Our average weighted interest rate currently is below 7. In terms of liquidity, at the end of December, we had about $280 million of cash mostly in dollar. Due to the challenges in 2020, resulted in decrease in EBITDA, net debt-to-EBITDA ratio reached 3.66 versus [indiscernible] 53% of revenue, more than $1 billion -- mainly in dollar dominated export revenue last year. We fully covered all our debt service expenses and other payments in foreign currency. Our currency balance remains strongly positive.And now I give the floor to Anastasiya for update and outlook.
Thank you very much, Viktoria. Thank you. We are on Page #13 of the presentation now. And in summary, I would like to say that the resilience and flexibility of the group's business model combined with the management team's considerable experience enabled the group to operate safely and efficiently during the year despite all the challenges we mentioned.We all have to admit that 2020 was extremely challenging, but it became a new normality for us now and new normality for MHP. So we all know that strong companies and wise management adjust and transform, weak and inefficient ones disappear from the arena, so MHP continues to transform and doing so now.So first of all, we are transforming our company from an industrial into culinary company to become a food producer. We will further develop both our sales channel through to market and our product offerings. Second, we are implementing SAP across all business functions of MHP. Here, we talk about digital, real digital transformation of the company. Third, additional group wide, including PP investments will be made during 2021 to enable further advancements in the efficiency of business processes through modernization, innovation and improvements in quality and cost control. These developments will include strategic projects such as [indiscernible] of sunflower processing line and brand-new R&D complex and further investments in product flexibility. Next, we will continue to explore M&A opportunities and to potentially acquire or establish further meat processing or/and poultry production companies internationally. And finally, MHP is becoming more and more sustainable company. I would like to highlight here a key tenet of MHP sustainable environmental policy and the clear sign of the company's commitment to taking a responsible approach to climate change. That is the company's target to become carbon neutral by 2030.So what do we expect going forward? Definitely, we expect poultry prices in our major market to adjust gradually in response to increased production costs, driven by higher grain prices. Currently export price for [indiscernible] have already recovered internationally and already increased since the beginning of 2021 by more than 20% compared to the lowest, barest point.We will continue to rebalance and diversify our sales in order to withstand current and new challenges, at the same time, sustain our profitability at high levels. Having been to gradually transforming into culinary company, together with marketing, sales and R&D departments as well as with big MHP team, we will scale and develop culinary pilot projects.Before we start Q&A session, I would like to say that despite all challenges we faced in 2020, MHP is targeted to maintain the status of the most cost-efficient company in the class with strong financial results. We have all resources to do so, business model, our strategy, strong team and innovative approaches.Thank you very much. I think now we are ready for questions.
[Operator Instructions] So we have a question from Konstantin Fastovets from Adamant Capital.
I have a couple of questions. Yes, maybe let's start with the poultry segment. So the first 1 is that during the last conference call you were guiding for costs in the segment to grow by about 15% quarter-on-quarter. And in the end, it turned out to be 25%. And so the first question is, why is there such a large difference? Was there some sort of a factor that you didn't take into account? Perhaps you could remind us how corn is sold internally, at what price and at what time? So anything that you could help with that.
First of all, for your operation, yes, when I speak about price the cost of production increased quarter-on-quarter approximately by [indiscernible] 22%, 23%, yes, first of all because protein, it was higher than we predicted.Regarding corn, we -- internally, our price between -- it was between segment -- yes, intersegment. It was approximately $100 -- around $200. But what is very important to emphasize that we -- last year, [indiscernible] very low harvest, and we had to buy corn from the market.
Right. Okay. And when you sell internally, do you sell at like...
We sell externally during the harvesting time, yes. We compare because we always -- yes, it is our clear policy. We always sell between segment at price, which we cut in Ukraine during the harvesting time.
Okay. Okay. So -- okay. Okay. So -- so you already knew the price, right? When we did our last call, you already knew what the price was for corn internally?
Yes. Maybe we just refinalized calculation beyond because I remember that we heard COVID, it seems to me, by the end of November and maybe time we finalized our gathering campaign, yes. And you know that the price of corn during the fourth quarter had changed a lot of times, yes.
Yes. Yes, that's why I was wondering because the dynamic was really rapid for the increase.
Yes.
Okay. Okay. So you would say it's mostly the protein that you didn't take into account when you were giving the guidance?
Sorry, please repeat the regarding quote.
The guidance. So the main question is that during the last call, you were guiding for about 15% increase, right? And it turns out to be about 25%.
Yes. Yes. I understand, it was 22%, yes, because of the protein, yes -- protein, yes, regarding sunflower. Yes, protein from sunflower and from [indiscernible].
Okay. And with that, did you also comment on why there was no such increase at Perutnina? Because from what I'm seeing, actually, the cost went down at Perutnina. Why is there such a difference between the 2 business segments?
To be honest, in the fourth quarter, the price of corn did not increase so significant in Ukraine during the harvesting time. Price of corn increased in Balkan, just started this 1st of January. Yes.
Okay. Does that imply that we're going to see an increase later on in Perutnina?
Yes, yes. Yes.
Okay. So you expect margins to go down in the next first quarter or second quarter?
No, no, no. Just -- margins will go down just, yes, but at the same time, Perutnina understands it and Perutnina wants to increase price. Yes, maybe increase in coal price will compensate increase in cost of production.
Okay. Could you also say -- I don't know if you've done this analysis on where you are on the cost curve for poultry globally. For example, where you compare with Brazil Foods or other producers. Are you around -- where are you on the curve?
No. I'm sure that despite the situation of this price of corn because we announced the price of corn increase not just in Ukraine in the U.S.A., in the Brazilian food, and at the same time, we understand that we remain one of the most efficient poultry producer in the world. Yes, which is why right now we see this price -- world price of meat start to increase, too. Because if you speak about current price of quarter, yes, because from the $12 million of import-export poultry meat, $7 million is real in the quarter. And now the world price of quarters increased compared to the, for example, in January by 25%.
Okay. Okay. So you are saying that despite the fact that in the fourth quarter you had the spike in cost you still remain at the bottom of production?
Main one of this -- yes. Yes. Because it is not something special only with our cost of production because it has happened with all meat producers in the world.
Okay. Okay. And then finally, could you give us a bit more guidance on where you see costs and prices in '21? So what kind of growth do you think you're going to be seeing there? And also on the margins since and you closed...
No, no. Yes. Regarding -- yes, if you speak about cost of production for the 9 months, we understand that our cost of production will remain the same level that we had during the fourth quarter plus/minus a few percent. Yes, but we have some uncertainty about because nobody knows what price of corn and sunflower will be since in the new season. If the price remained at the same level, yes, we will keep our price very similar that we had in the fourth quarter.
Okay. And with regard to prices for poultry internally and externally in terms of exports, where do you see -- what kind of a dynamic do you expect for next year?
Price -- no. Yes. As I told previously price in Ukraine, yes, increased until today approximately by 13%, and should we suppose that we will see further increasing of price of different kind of, not just of poultry, yes, and which is a good positive dynamics of world price, not just of quarter. And which is signal of increasing price in Europe, not so high than quarter's price, just 5%, mainly. But I think that price will go up for compensating the increase.
So, it will -- I think it's probably really like it is going to go up, the question is by how much -- what are the sort of -- what are you budgeting? Are you budgeting like a 10% increase year-on-year, 15%, roughly? Could you give us a figure for the year?
Yes. It's a very [indiscernible], yes. We will put in our budget there the figures of both around 12% total, year-on-year.
Sorry, can you repeat what the percent is?
12% year-on-year, 12%
We also have a question from [indiscernible]. I think we lost [indiscernible]. So let's move on. We have a question also from Ksenia Mishankina.
I have a question on your leverage. Given that you have now exceeded the covenants, how do you see your leverage going forward? And what effect do you see?
Yes. Yes. Thank you for your question. Yes, thank you very much for your question. Yes, this current leverage 3.6% is not comfortable for us. And we understand that we achieve this leverage because our EBITDA of 2020. It was lower than our expectation because you understand the 2020, it was very, very challenging year for MHP. No, just not for MHP, for a lot of different producers. But with our budget, we expect that by the end of the year, we expect that our leverage will be around 3%, 3.2%. Hello?
Sorry, can you hear me?
Yes, yes.
I think the line got cut off. So, yes -- so you expect it to come down to around 3%, did you say?
Yes, 3%, 3.2%, yes.
Okay. And what was the -- sorry, what was the main driver behind EBITDA decline?
In 2020?
Yes.
Yes. The main driver, yes, because [indiscernible] despite a very challenging 2020. But anyway, we increased our sales volume both on export and in Ukraine. But at the same time, price last year was low compared to the previous year, both in Ukraine and exports. So it is the main driver, yes. And additionally, in the fourth quarter, our cost of poultry increased by around 22%.
Okay. And could you please comment also around the situation in terms of the bird flu?
Well, yes, today, yes -- today...
If I can pick up this. If I can -- Viktoria, if I can pick up this, okay. So actually, Ukraine has been experiencing a number of outbreaks of avian influenza since December 2020. And it's not only in Ukraine, as you understand, it's a kind of -- as you may assume a pandemic as well as also in the European Union, especially at the moment.And of course, it sets certain restrictions on export operations, especially if there is no -- and at that time, actually, at the beginning of the year or at the end of last year, we don't have still in place the regionalization between Ukraine and the European Union. And actually, it's a very good -- we have very good news that just recently kind of a week ago, so there was -- there is a deal right now. And so MHP as a company producing chicken meat in Ukraine can start again export to the European Union, right? However, I have to say that the biosecurity measures at MHP are very strong, and we didn't have any cases.
Okay. So basically, you expect the volumes to rebound this year in terms of exports?
Stable volumes, if you talk about exports and local sales. And also, if you talk about production volumes as well, I would say, stable production and sales. That's right.
So we also have a question online from Dan [indiscernible].
I just have 1 question. I know you have some bonds due in 2024. I was just wondering if you're looking to refinance this? Or are you thinking about the leverage in any way?
Thank you for your question. No, generally, yes, we are thinking to refinance 2024 bond, but within the announced earlier. But anyway, we [indiscernible]. Yes. And when you talk -- yes, please.
We also have a question from [indiscernible] at REDD Intelligence.
So I have a few questions. First one is I know that you mentioned about the possibility of an M&A, so international expansion. So is it possible at all to clarify in which country or countries, regions that you have plans for? I know that back in 2018 you're interested in purchasing a French poultry producer. And I also know that you're competitor [indiscernible] have plans in egg production in [indiscernible]. So just was wondering if you could clarify a little bit more on that.
Thank you for your question. Yes, our priority #1 is Europe -- yes, Europe, because, yes, we're very satisfied with our acquisition, Perutnina, and we continue to consider different possibility to buy some meat and poultry producer in Europe.
And is it possible to clarify which country?
Yes. Yes, the rest of Europe, different countries. I don't want to -- yes. Yes.
Great. And my other question is, if you have any further vertical integration expansion plans, domestically speaking, as -- I mean, as I understand, there is -- you recently launched the retail branch, and now, as I believe, in Ukraine. Anything else within your vertical domestic expansion?
Thank you for your question. Yes. So we launched the another market, yes, together with our [indiscernible]. To be honest, that we -- yes, we had the franchisee and different outlet of our franchisee. It is some new model of retail outlet. Yes. And now we're considering a few models for [indiscernible] together with our franchisee with our current partners.Yes, the good part is very important to be close to our client. Yes to be close to our clients. And we -- and our strategy to increase sales of our chicken was value-added product and different convenience food related to meat product. And that is why the direct channel to our clients is very, very important.
One more question is in regards to -- if it's possible for you to provide more clarity on what market share does MHP make up in Ukraine, say compared to KSG Agro and [indiscernible] and Delta Wilmar?
Sorry, maybe you clarify your question, because our market share compared with whom?
[indiscernible].
No, our -- yes, to be honest, our market share of industrial production market in Ukraine, approximately maybe today around 65%, 65%. But at the same time, you understand that 50% of total -- our production volume we send for the export. On domestic market, I think that our -- because, yes, because we need to understand that Ukraine today is -- continue to import part of meat and approximately 50,000, 60,000 tonnes every year Ukraine imports meat. It is mostly MDM. It is not the meat for supermarket or retail. It's just mostly for meat processing company. And approximately more than 1,020 tonnes of chicken in Ukraine produced by householders. That is why our market share of total consumption as market in Ukraine around 35%, 37%.
And I was also wondering if MHP is expecting any additional funding from IFI such as EBRD, EIB or IFC?
No, we have said today we have more than $300 million [indiscernible]. That is why -- and we have in cash in our account around $200 million, no, right now no.
I see. And 1 last question. I was just wondering in terms of if you're keeping track with the EU regulations in terms with the duty-free quotas and specifically how that would affect MHP?
Anastasiya?
There are no actual changes on that front from 2019. If we talk about the same topic, right, if we are talking about EU quotas, right? So still the same volume is in play, 70,000 tonnes of chicken. This is the quarter for the year. And -- but there is an additional quarter as soon as there is U.K. -- the U.K. left the European Union, right? And according to the agreement with Ukraine and the United Kingdom, there is an annual quarter at least now, for this year, I mean, which is around 12,000 tonnes.
We also have a question from Yulia Di Mambro from Federated Hermes.
Most of my questions have been answered, but I just have 1 more question, please. Can you give us some guidance on your working capital for 2021. When do you expect the outflow that you saw in Q4 to reverse?
Your question about investment in working capital, we don't expect any big investment in working capital, around only just $15 million, maybe $15 million, $20 million because we have planned to increase price. And that is why we understand that we will have investments to increase our trade receivables.
We also have a question from Paul Sheridan at SilverEdge. And Paul is asking, with respect to the grain growing segment, could you please describe the current condition of the crops in the ground?
No, current condition of our crops is good. Yes, current condition is good.
Yes, because if we talk, as Viktoria mentioned actually, our crops because these are our winter crops, right. The weather in -- during the winter was very good and the spring selling campaign hasn't started yet. So it's too early to talk about our, let's say, major crops like corn, soya or sunflower, which will be only sold in March, May -- sorry, March and April.
We have a question from Natalia Shpygotska at Dragon Capital.
I also have a couple of questions from the grain growing segment. First 1 would be, how do you expect your cost in the farming segment, your cost per hectare to evolve in 2021 for upcoming sowing campaign? And second one, if the company has already presold part of its 2021 crop harvest, and if yes, what share and at what prices?
Thank you for your question. Regards our cost in grain segment, we expect that this cost in dollars will remain -- that is the same level that we had in 2020. Regarding our worker's contract area, we thought that's not so significant part.
Okay. So it's like less than quarter, less than 1/3. It's something like that?
No, less than -- yes, I think that's less, maybe around 10%, 12%, 15%.
Okay. So company is betting on further growth in crop prices closer to the harvesting?
Yes. Yes.
[Operator Instructions] So the question we have is a web question from Dmitry [indiscernible] Capital. Dmitry is asking, does MHP have a plan to reduce the company's total debt this year? And is it possible to cut the total debt to around $1 billion in the medium term?
Yes, we will reduce but very insignificant because as I told previously 94% of total our debt is eurobonds, yes, which is why we reduced -- we have planned not so significantly reduce our debt. We have planned how to increase our EBITDA for this year.
So we have another question. So Konstantin Fastovets from Adamant Capital has another question.
I just want to ask on CapEx. Could you guidance on CapEx for next year, especially given that...
CapEx for the year $120 million.
$120 million. Okay. And does that include your initiatives to become a culinary company? So are you implementing any projects that we should be aware of anything if there was?
Yes. Yes. Yes, it includes our project for culinary company [indiscernible].
Can you mention a bit more on what they are?
It is approximately $20 million.
$20 million for culinary project, okay.
Yes.
Okay. And 1 more question on dividends. So if you end up hitting your target leverage by the end of next year of 3% to 3.2%, as I mentioned, do you expect -- in this scenario would you expect dividends to go back up to where they were before -- $80 million, I think this is what you had before you dropped down to $30 million?
Yes. It's a very good question, but it seems to me now to tell about this is [indiscernible]. No, we will decide, yes. Potentially, yes, we have to -- yes, we have tension to increase dividend, but anyway we cannot say right now and let it be.
So we have no more questions. So I'll now hand it back over to Anastasiya for closing remarks.
Yes. Thank you very much, Tim. Thank you very much all participants. Thank you very much for the MHP team. That was a very good presentation and together with all your questions. Once again, if you would like to ask your questions, please send us your e-mails or give us a call. And for now, thank you very much, and have a good afternoon. Thank you, and goodbye.
Thank you. Thank you. Thank you, very much.