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Ladies and gentlemen, thank you for standing by. And I would like to welcome you to MHP's 4Q 2022 financial results call on the 11th of April 2023. [Operator Instructions] The format of the call today will be presentation by MHP management and IR team, followed by a question-and-answer session. So without further ado, I would now like to pass the line to the MHP team. Anastasiya, the floor is yours.
Thank you very much, Michael. Dear stakeholders, good morning, good afternoon. Thank you for joining us today for MHP's conference call. I'm Anastasiya Sobotyuk, Director of Investor Relations and International Communications of MHP SE. Together with Viktoria Kapelyushnaya, CFO of the company, we're glad to present to you MHP's financial and of course, operational results for the fourth quarter and full year of 2022. 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. Please take it into consideration. Now we move to Page 3 of our presentation. Let me start from a general overview. 2022 was extremely challenging for Ukraine and for all businesses in the country. The war started at the end of February with no understanding how it could progress and to what extent. We immediately set out our priorities at the time to care for our people, to maintain food security, and to support Ukraine. Operational challenges for MHP were very significant: the mobilization of employees, the disruption of supply chains, a temporary decrease in the supply of some goods, including vitamins and minerals to produce feed, and plant production goods including pesticides, the physical destruction of energy and infrastructure, and the temporary occupation of some territories. The war in Ukraine continues. It is more localized now, mainly in the East and in the South of the country. However, there is a significant level of uncertainty how the war will develop and when it will finish. Moreover, it is highly unlikely that MHP, as well as any other business in Ukraine, can foresee signs of adverse impact on its operations, which can potentially occur at any time. Macroeconomic situation continued to look very challenging in 2022. GDP in 2022 decreased by around 29%, while next year, taking into account that active hostilities finished by the end of this year, the economy will begin to recover. We all keep our fingers crossed. Inflation ratio was at 27% in 2022, and it is expected to be at around 19% in 2023, still extremely high. The unemployment level is still very high, reaching 26% in 2022. It is expected to remain almost at the same level in 2023. There is still a significant amount of people staying outside of Ukraine, up to 8 million as of today, for obvious reasons. The currency ratio is expected to continue to devalue and it will be at around UAH 42 per USD 1 in 2023. Let me now proceed with the company's results for the year, and we go to Slide #5 of the presentation. I will start with operational highlights for the year. Driven by a decrease in capacity utilization, poultry sales decreased by 5% and reached around 666,000 tonnes. Following the operational plans and taking into account manageable situation with export sales, MHP managed to reach almost 100% capacity utilization by the end of 2022. Facing significant challenges in logistics during the first 3 months since the beginning of the war, poultry exports from Ukraine decreased by 8% to around 368,000 tonnes, with a significant share of transhipments made through the territory of the European Union to the MENA and African countries. Total share of exports out of the total poultry sales volumes decreased from 52%. 2022 financial results are following: Group's revenue increased by 11% and reached over USD 2.6 billion, with export revenue representing 61% of total revenue, mainly driven by high export prices for poultry meat, partially offset by lower volumes and high volumes of vegetable oils sales. Adjusted EBITDA decreased by 41% to USD 384 million. That was a real and direct impact of the war on our business, when MHP team was working 24/7 to offset war impact. The decrease in EBITDA is mainly driven by substantially weaker results in grain growing operation segment through -- though as a result of significant increase in production cost, prices of fertilizers and plant production materials, for example, increased by over 40%; lower grain prices in Ukraine because of the logistics challenges, for example, ports, are partially operational even now; and increased logistic cost, as well as, lower yields compared to 2021 harvest. As a result of the war, MHP had over USD 69 million of war-related expenses, mainly as a result of insolvency of MHP partners in Ukraine, who because of the war lost their assets or ability to operate, support to communities, written off inventories, and biological assets. So I think we can now proceed to the key financials for the fourth quarter of 2022. And we go on Slide #6 of the presentation. Despite extremely challenging operational environment in the fourth quarter of 2022, the group's revenue increased by 6% and reached USD 766 million, with export revenue representing 64%. Due to the launch of the additional sunflower crushing facility in October 2022, MHP managed to increase production and exports of sunflower oil by 21% year-on-year. Adjusted EBITDA decreased by 16% year-on-year to USD 109 million with EBITDA margin of 14%, significantly down year-on-year because of the war disruptions. Let's go on Slide #7 of the presentation, which shows our financial results by segment. And this information is for the total 2022. Poultry operations remains our key segments. The group generated the majority of total revenue, around 71% and 70% of the group's EBITDA. Grain segment generated 6% of total revenue and 24% of companies EBITDA. Meat processing and other agricultural operations generated just 5% of consolidated revenue with around 2% contribution to EBITDA. Please take into account that in April 2022, MHP closed its meat processing facility in the Donetsk region, which resulted in significant decrease in meat processing operations of MHP Ukraine. The European operating segment generated 18% of total revenue, and actually around the same amount contribution to the company's EBITDA. Let's have a closer look at each business segment. And I would like Viktoria to continue the presentation.
Thank you, Anastasiya. Good afternoon, everyone. Let's give a precise look at Poultry segment performance, Slide #8. Needless to say that during 2022, MHP has been facing complex challenges and disruption in operations, in sales and logistics, as a result of war in Ukraine. Since the beginning of the war, MHP had to cut production by around 15%, and then only at the end of first quarter this year, MHP managed to reach full capacity in poultry production again. Taking into account the enormous number of attack on the energy infrastructure of Ukraine during the fourth quarter and the first quarter 2023, which can continue in the future, there is always a risk of potential decrease in poultry capacity again. The impact of the war in Ukraine remains unclear at this time and can change seriously, quickly and without notice, as you understand. Despite number of difficulties due to the war in Ukraine, MHP delivered a quite good result in 2022. However, we already see the challenges ahead, I will talk about this trend further in presentation. The main driver of our strong result in 2022 is the 40% of annual export price increase across all the markets, which was particular negatively offset by increased logistic cost due to the war and lower export volume. An additional positive effect on the cost of take and feed for poultry production was due to the favorable ratio of price for sunflower seed and oil. Export price increased significantly during the second quarter and third quarter of the last year. However, due to the change because -- however, due to the change in the economic environment in EU and U.K. and increased competition in the MENA region from September 2022, poultry price across all exports -- almost all export markets started to decrease, which resulted in more than 11% decrease in price in last quarter, in Q4 quarter 2022. And current price in EU and MENA region, lower than in Q4 last year, lower by 10%. At the same time, sales of poultry meat in Ukraine, despite a substantial decrease in population, migration and disposable income, high unemployment rate with a weak labor market mentioned by Anastasiya, all that remained stable in Q4 last year, year-to-year and quarter-to-quarter. Average poultry price in U.S. dollar, however, decreased substantially by 22% year-to-year, driven mainly by depreciation of Ukrainian hryvnia. MHP is regularly exposed to commodity price risk. To mitigate this risk, we continue to focus more and more on non-commodity products, ready-to-eat, ready-to-cook. However, penetrating an increasing of our sale of this market requires a lot of effort and expenses at today and in the near future. Let's move to the Slide 9, grain-growing operation. It is important to highlight that despite high prices for grain of international markets, export price for grain from Ukraine is significantly low compared to the international price due to the logistical substantial increase as a result of the war in Ukraine, and challenging, unstable logistics and regulation Ukraine deals with. Obviously, this negatively affects the profitability of MHP, as well as all agri producers in Ukraine. Moreover [ best ] weather condition in regions where our land are allocated, especially in Vinnytsia and Cherkassy, of 2022 negatively affected our harvesting campaign. This is a result in low corn and sunflower oil, compared to one in 2021 year by -- corn minus 28%, sunflower seed minus 22%. EBITDA of grain segment net IFRS 16, last year constitutes $93 million compared to the $340 million previously in 2021, mainly due to the lower yield and grain prices. I would like to note the part of EBITDA in 2022 was attributable to positive impact of hryvnia functional currency on the group farming companies, where hryvnia denominated expenses declined due to the currency devaluation against the U.S. dollar. Let's proceed to the Slide 10. Meat processing business financial performance deteriorated significantly due to suspension of Ukrainian Bacon operations in Donetsk region in April 2022, partially the equipment has been relocated to other region in Ukraine. Additional negative impact was due to significant decrease in demand for HoReCa segment during the last year. As today, MHP produced around 1,000 tonnes of meat processing product per month. Before the war, we produced and we sell almost 3,000 tonnes per month. Let's proceed to the Slide 11. Several words about Perutnina Ptuj. Growth in capacity in Serbia and Croatia resulted in 16% increase in poultry sales year-on-year, while EBITDA was stable year-on-year since the increase in sales volume and price were set by higher cost of production and selling, general and administrative expenses. The devaluation of euro against the dollar had additional negative impact on the Perutnina's financial results. Slide #12. A few words about our cash flow and liquidity position in 2022. Cash flow from operations before changes in working capital amounts $480 million, higher compared to the EBITDA, due to noncash adjustments mainly related to IFRS 41 standard. Cash from operating activities was mainly investment in working capital, mostly related, first of all, an increase in trade account receivables and stock of sunflower oil, [ meat ] due to lower settlement period as a result of increased delivery periods, as well as due to increased production sunflower, this investment around $150 million in 2022. Secondly, higher volumes overall materials were accumulated to ensure confidence in smooth operation of our factory, as well as the needs of sowing campaign. The main investments were direct to the purchase non-grain, vegetarian components, packing material, gas and fuel resource, fertilizer, plant and protection product and feed. Total amount of this around $150 million. This high investment in working capital was caused mainly by war. We don't expect that realize the working capital while the war in Ukraine continue. Total CapEx last year was $160 million, mainly related to, first, competition (sic) [ completion ] of projects that we started in 2021, such as oil crushing plant and other. Secondly, some logistic projects, we brought barges and [ dry weight bunker ]. So generators, I'm sure that everybody understands that we need to buy generators to ensure the smooth operation of our factory, and we will continue to purchase generators at the beginning of this year for maintenance and new equipment. Regarding debt, at the end of the period, the company total debt was nearly $1.5 billion, net debt about $1.2 billion. Using the opportunity, I would like to send all our Eurobond holders and banks, our tight cooperation support and partnership during the difficult times of Ukraine, allowed MHP to receive our consent for 270 days interest payment expansion, which the company met in full and on time at the end of 2022 at the beginning of this year. At the same time, we have now received the approval for prolongation of uncommitted lines from all banks until August and December 2023, second time since the beginning of the war. We remain a responsible partner, and we have paid premium coupons to the date. The operating environment remained volatile, extremely challenging and unpredictable, including the NBU restriction regarding capital movements outside of Ukraine for the all Ukrainian legal entities and individuals. The liquidity position at the end of the year was 300 million in cash, mostly in dollars. Given the current operation environment and significant uncertainty, we estimate our minimum sales cash balance at $200 million. And now I give the floor to Anastasiya for update and outlook.
Thank you very much, Viktoria. So let me start with an update regarding the war in Ukraine. We all understand the situation remains highly unpredictable and uncertain. The war continues. Missile attacks are likely to continue with a potential harm to the infrastructure of Ukraine. Hopefully, MHP's facilities will continue to operate as usual. Prices in several poultry markets, including the Middle East and EU have softened substantially, and they've been softening since the end of 2022, and they are expected to remain stable at least due to excess supplies, difficult economic environment in different parts of the world. However, trends are subject to the aid and influence spread and stabilization of economic situation worldwide. There are upsides and downside here for sure. Vegetable oil prices since the beginning of the year decreased substantially. We can see that internationally, 20%, 25% decrease and are likely to remain at this level through 2023, as the market is overloaded by sunflower oil supplies from Russia and saturated EU market from 2022. Grain prices decreased -- are decreasing worldwide by around 10% -- have decreased by around 10% since the beginning of the year. And even more, they decreased in Ukraine, driven by the problems with logistics, compounded by the ongoing effects of the war in Ukraine. As of today, we do not foresee grain price increase in the nearest months, taking into account strong harvest of soya and corn in Brazil, particularly. However, the landscape is subject to change, it can -- it may change later this year with new harvest. A few words about Perutnina Ptuj. It continues its further production growth in the Balkans, following the group's strategy of culinary transformation. Let me stop here, and we will be glad to answer your questions.
[Operator Instructions] Our first question, voice question, comes from Mr. Daniel Zaczkiewicz from Barclays.
You mentioned that you see your cash level that you need around $200 million. I mean, do you expect that your current cash position is going to be sufficient for your working capital needs for the summer?
Thank you for your question. Yes. Yes, especially in current situation, with a little bit of a challenges [indiscernible], the minimum $200 million and current our position $300 million is more or less, yes, acceptable. Yes.
And could you give some idea of how much of your cash is held internationally and available for debt service or whether you have offshoring of cash when needed?
Yes. So we try -- to be honest, yes, we try to keep the most -- the bigger part of our cash outside. But at the same time, you understand that we have the strict requirement during 180-days to return this amount to Ukraine, yes. We provide a lot of export, but we need doing the 180 days to return money to Ukraine, yes. Now we keep 80% of total of cash abroad but at the same time, yes, we have this obligation.
And then finally just maybe on the logistics of your exports. You've obviously done a very good job of completely changing your export model. Do you think there's scope for improvement in working capital or the costs of the current export model? Or do you feel like you've got it quite well optimized now?
Your question about how we optimized our logistic, yes, after the war, this year?
Yes.
It's a very interesting question. If you ask me what is the price of -- logistic price for a special logistical meat was 1 year ago in April last year and in May, it was -- to be honest, it seems to me maybe 30% higher than today, yes. But at the same time, current price of logistic of meat doesn't matter to Europe logistic. Or you speak about African, MENA regions, anyway. Currently, our price of logistics approximately 70% to 90% higher compared to before the war. You understand my point, yes? Yes, we optimize price compare at the beginning of the year, yes, slightly optimized, maybe 20% to 25%. But at the same time, current logistic price is higher if you compare to the -- before the war by 70% to 90%.
[Operator Instructions] Next question comes from [ Ms. Erica Ive ] from MetLife Investment Management.
I got just a follow-up on the 180 days that you have to repatriate cash in Ukraine. When is actually the deadline? I mean when -- because we keep saying about this 180 days and it's a quite a while we keep saying that. But realistically, when are you supposed to repatriate your cash in Ukraine by?
You need to understand that every month we provide exports, yes. And every month, we must repatriate cash, which we exported over 6 months ago. Do you understand? Yes, we need – it's a cycle. Because every month, yes, we export every month, we export 40,000 of sunflower oil. Every month, we export approximately 1,000 tons of meat and yes.
So all else being equal, if you have carried on paying coupons so far, you reckon that you will continue paying coupons given that got still a 6-month lag, time lag?
No. Yes, I think that -- yes, it would be very -- yes, it would be -- because you understand that we paid until today since the start of the war, we paid 3 coupons. Not only -- we paid 3 coupons, total amount $100 million -- approximately $150 million, and received special permission and not just special permission for MHP, is the permission for all companies in Ukraine to pay some interest rates outside in Ukraine only for 1 coupon. To be honest, $100 million, we paid as coupon yes, to bondholder through this revenue through the cycle.
In terms of the actual survey that you sent out a while ago about the suspension of coupon payments, is there going to be any follow-up around it? You were basically assessing investment -- investors sentiment and ideas around suspension of coupon payments.
No -- yes, I suppose, yes. We did the best, yes. I think that, yes, we will -- yes. And at the same time, yes, we asked about the permission from our NBU, yes, again. And we will try to pay this revenue, yes. We will do everything to fulfill our obligation.
I see. So basically, I seem to understand that basically, you are able to continue paying coupon just because you've asked a special permission. Is it correct?
It is the one way, yes. One way if we ask, yes, we would like to add the special permission. But to be honest, I have a lot of concerns that our NBU provide the permission to MHP because I know the situation with other companies who ask about this permission with NBU. But at the same time, yes, we can. Maybe we will try to pay these coupon -- yes, next coupon from revenue. And we expect and we hope that war and situation will improve and war will stop and regulation of NBU will change.
We'll be moving to the last voice question before we proceed to the text questions. Next question is from [ Joe Mailander from Red Intel ].
I was just seeking some clarity following up from the previous question. Am I right to understand then that you're not intending to further restructure or reschedule the 2024 Eurobond commitment, either with regard to future coupon payment or the principal repayment and likewise, with your longer-dated Eurobonds?
Thank you for your questions. Yes, no, as you understand, it is difficult to focus how the situation will develop in Ukraine. But at the same time, our priority, you understand that we continue to operate as efficiently as possible across all business segments, taking in account war situation in Ukraine. And company understands the 2022 bond maturity is the one -- is important question on the agenda. And we will be able to address it appropriately during this year.
I see. So you intend to be able to repay the coupon and the principal next year for 2024. Is that right?
No, no, no. Sorry, it's my mistake. Yes, exactly 2024 not 2022. Yes, I talk about the maturity of bond 2024, yes. Yes.
We'll now be moving to the text questions of the call. The first question from Jessy from DAR Capital. What kind of development have you seen so far in the poultry exports market with regard to demand and pricing?
Sorry. Sorry, excuse me. Please repeat about poultry export market.
So what kind of development have you seen this year in the poultry export market in regards to demand and pricing?
Yes, yes. I said on the presentation what we see right now, especially regarding the price of export market. What we see current price in Europe, if you speak regarding the [indiscernible]. And if you speak about the small chicken in MENA, current price low compared to even price of the first quarter, lower compared to the fourth quarter, approximately by 10%. If you compare in the first quarter last year, price are lower, maybe approximately 7%. As I told in presentation, the maximum is the peak of price of export market in Europe and MENA, in the Saudi Arabia region, were in the -- during the summer last year. Yes, it was unrealistic high price, and that is why we received and we achieved so high result in poultry segment last year. Now price unfortunately low and our expectations -- we assume that maybe this price will continue the same level. We hope that price of chicken in these 2 very important regions will not decrease more.
Next question comes from [ Constantin from Uptore Capital ]. There's a few questions here, so I'll just read them. The first question, what is your thinking on the 2024 bond maturity. The second question, could you please confirm cash position as of 31st of March 2023.
By the end of the March, our cash position was completely very similar as the beginning of January, around 300 million. Regarding maturity of our bond 2022, we understand and we think that bond maturity to 2024 is a crucial question for us, and crucial question for agenda. And I'm sure that we will be able to address it appropriately this year.
Continuing the question from Constantin. Could you please give an update on the latest NBU regulation and the ability to pay coupon in the second half of 2023? Prices are softening. Do you have scope to improve volumes and do you see a reduction of cost pressure?
Yes, your question about the 2 parts. One of the -- regarding payment coupon in the second half of 2023. And the second part of the question about cost pressure, yes, please clarify. I didn't catch it, the question about coupon.
Yes, this is the second question is prices are softening. Do you have scope to improve volumes as the prices are softening and do you see a reduction of the cost pressure?
Regarding the coupon, yes, no -- yes, we attract because MHP, yes, I would like to emphasize that MHP always was and is a reliable partner for all our partners, yes. And we, yes, we will do everything to pay coupon in 2023. We will do everything, yes. But at the same time, we have some restriction. We discussed about what, yes, 10 minutes ago. But yes, no, it's very difficult, if situation will continue -- yes, yes, I think that we can and we do everything to pay this coupon. But unfortunately, yes, I understand that I told this a lot of times, we continue to leave during the war, yes. And unfortunately, it's very difficult and predict what will be in the second half of the year, because you remember that just only 3 months ago, only 4 months ago, yes, we had the big problems, sometimes a big problem with electricity and a lot of different situation. And unfortunately, it's very difficult to predict what we will have in the second half.
We'll move on to the next question, and I acknowledge the voice questions from Dragon, MetLife and JFS. We will come back to you shortly. This text question comes from [ Eli from PWP ]. What is the estimated value of assets of Perutnina? And what is the outstanding balance of the 2 loans? I think you mentioned it to be EUR 140 million on the previous earnings call.
Yes, regarding the Perutnina, I cannot say exactly figures about this because I don't see right now the balance of Perutnina because you understand I described it out of consolidation balance. But total loan in Perutnina, it seems to me EUR 140 million, yes, around this EUR 150 million.
The next text question comes from [ Mr. Magnus from Vogue ]. Can you please explain how 2021 adjusted EBITDA in grain was higher than revenue?
Yes, it is not something new. If you look at our historical figures, if you look at P&L during all our history, yes, there always -- not always but tends to be 90% our EBITDA higher than our revenue because here, the revenue to certain part. The biggest part of grain, we consume internally in poultry segment. Yes, you can see the revenue, this revenue intersegment, if you look at our financial report in segment, you notice which describe segment, yes. And that's why yes, our EBITDA through -- EBITDA in grain segment, yes, from all our operations remedy only to certain part.
Next question comes from [ Joseph from JR Investments ]. Two questions. Thank you for keeping the company running in this extreme and difficult situation. My first question is, what is your plan in order to pay the bond that matures in 2024? The second question is, what was the cost of energy before the war and what is it now and the tendency for the future?
Regarding the bond 2022, I asked -- 2024, sorry. I talked about this twice because unfortunately I cannot add something new, I talked about. It's a very, very important question to ask. And regarding price of utility, last year, the price of gas increased by twice, electricity plus 30%, 40% and fuel around 40% compared to the price 2021, compared to the price, yes, price of utility 2021.
[Operator Instructions] The next question is from [ Mr. Dmitry Ivanov from JFS International. ]
I have a few questions, first, on this extension of bank loans till August-December. Could you give us a bit more color on this extension? What was the amount of bank loans that were extended to August-December this year? And then lets imagine for now for simplicity that there is a status quo situation in Ukraine. How do you see repayment of these loans? Like would you kind of ask for like extension or you use cash offshore to repay these bank loans when they're due in August-December 2023? So that is the first question from me.
Yes, total amount of this loan approximately $150 million, yes, we prolongate it to August-December depends with banks. And no, we will try again to ask about prolongation. Yes. Because as I told during the presentation, this year, we invest more than 300 million in working capital. And we will keep this amount in working capital until the end of the war, yes. That is why we do need money.
And kind of clarification on working capital, like invest of $340 million in year 2022. And you mentioned that you want to maintain this level of working capital in absolute amount. So does it mean that like at least expectation for this year, again, like I think we're talking about a status quo scenario that there wouldn't be like a negative working capital impact this year. So at least that will be like a working capital neutral this year or something else? Would be great to have color on working capital changes this year?
Yes, thank you for your question. Because, yes, it's a very big issue regarding reimbursement period, because you understand that our export around 65%, almost 70% of total our revenue, and total reimbursement of VAT, which we should and we forecast that we get from government $150 million. Yes, for me, it's a very big issue because last year, we had investments in VAT, but approximately $30 million because for this year is a very big issue. And unfortunately, I cannot predict, yes. I'm sure that, yes, trying to be conservative. And I think that minimum $50 million, $70 million, maybe we will have investment in working capital, mostly related and the big part of this related to the VAT reimbursement because I see how situation now on the market, VAT reimbursement spend. We don't see or maybe war will continue or it will stop, yes, and in that case we not have any problems in reimbursement VAT.
So basically, the items that might affect your cash flows is VAT reimbursement, which is in the worst-case scenario, $50 million, $70 million impact on working capital free cash flow this year?
Yes, yes. Maybe [indiscernible]
And if you could just give us some guidance on the capital program, CapEx this year? Again, like base case status quo scenario that would be very helpful.
Sorry, your question about CapEx, yes…
Capital expenditure, CapEx, right.
Yes, yes, capital expenditure. Capital expenditure this year, our expectation, yes, $150 million, $170 million, yes. I will explain, I understand is a big amount, but we need to understand why. Yes. First of all, as I told during the presentation, some approximately $30 million -- $25 million, related to war situation, because -- and in the first quarter, we bought some generators, yes, generator and we need to build some social permission, yes, for employees. And we buy some logistics, a very big amount of maintenance, approximately $70 million -- around up to $70 million on maintenance CapEx regarding all our businesses, yes, and together businesses in Perutnina. Such is CapEx related to our culinary strategy, I will explain what is it. Because as I told, yes, we need and we must produce more non-commodity products. Because as I told, price of commodity and chicken is very fluctuated. And when we produce more non-commodity, we can ensure of this – defluctuate it. And this CapEx around $40 million. Total CapEx is at previously approximately $150 million to $170 million.
And just one more clarification regarding your offshore cash. You mentioned like 80%, approximately 80% was offshore cash balance, which is like approximately USD 240 million. And just to clarify, what's the proportion of Perutnina cash balance in this number, like approximately? And maybe you have a rough, you mentioned like absolute amount.
Yes, Perutnina, approximately from 80%, approximately $70 million to $60 million.
We did register a question from Mr. Luis Cabral earlier from Northlight Capital.
Just a quick question. Recently, I think Poland is thinking of suspending imports of grain from Ukraine. Could you give us sort of an update on the situation? I understand it's fairly recent, but also whether or how much you export into Poland, grain?
Viktoria, maybe I can catch this question.
Yes. Yes.
Thank you very much for the question. Actually, the situation with the grain deal remains very uncertain. And rather, I would say, unstable because we all hear the news that the grain deal has been extended. And there are some resources which are telling us that it has been extend by 60 days and other resources are telling us that it was extended by 120 days, right? So frankly speaking, that is why it is very, very uncertain. And frankly speaking it creates an additional turbulence for our traders. I mean the traders in Ukraine. Unfortunately, because of that, we do not have stability in operations. Moreover, definitely, we have a different challenge, which is not in Ukraine, but it is in Bosphorus, right? It is in Istanbul, right, where, unfortunately, there are many additional challenges set by the Russian bureaucracy. And we used to have approximately 10 ships per week arriving to Ukraine. At the moment, we have 2 to 3 ships arriving to Ukraine than to be loaded with grains. Unfortunately, this is how the situation looks like as of today. And unfortunately, as you understand, it doesn't bring us, MHP or Ukraine in general, too much certainty what will happen with new harvest and with new export sales. Frankly speaking, when it comes to Poland, as you understand, we are not the biggest grain traders in Ukraine, and specific into account that we produce grains mainly for internal processing for -- to produce chicken feed -- sorry, feed for chickens, right? And therefore, it's difficult for us to be 100% certain and inform how much we export to Poland.
Our next question comes from Kyle Kneisly from Knighthead Capital Management.
A few questions. On the net working capital forecast for 2023, could you reiterate what you expect, I think, I had heard $150 million potential inflow, but I also heard $50 million to $70 million potential investments. I was just curious what the total net working capital cash flow is expected to be for the coming year?
So, yes, I guess your question about investment in working capital 2023, yes?
Yes, correct.
Yes. As I told previously, our expectation about investment in working capital, approximately $50 million to $70 million. I will explain why and what is it. This is mostly regarding to reimbursement VAT, because total amount of VAT based of our budget for 2023, total amount around $140 million. It's a very big amount and my expectation, our conservative expectations that, unfortunately, we will not receive all this amount. But is the main contribution in working capital regarding VAT.
Okay. So what about all of the -- so we had negative $300-plus million of net working capital for 2022. And I think the prior year was negative $250 million. So there's no -- so this year is going to be negative $50 million to $70 million in addition to that negative $600 million?
Yes. Yes, you're correct.
Okay. On the EBRD facility, in the press release there was a notation that an incremental lender provided $10 million. Could you provide any detail as to who that lender was?
Sorry, the connection is not so good, please, yes, what is the question about -- last question?
In the subsequent events noted in the press release, highlight the EBRD facility, the $90 million, which -- it's also noted that a third-party lender provided $10 million. Could you provide any detail as to who that third-party lender is that provided $10 million?
One minute, sorry. It's a very interesting question. Yes, we -- yes, we talked about $100 million, but in real life, we received just yes, $90 million by EBRD, and $10 million, no, we did -- we -- yes, we did not receive, and we don't know who will provide to us this money. Not yet. The lender, yes, it is because EBRD organized this process and yes.
In the $300 million current cash balance, I think you noted that the March ending cash was approximately $300 million as well, how much of the EBRD is drawn in that $300 million?
Yes, I will explain. EBRD, yes, EBRD loan, we can use for only to buy sunflower because it's a [indiscernible] loan. And I understand your question. If you ask me, by the end of March, we had $300 million, yes?
Correct.
Yes, but not by the end of last year because it might confuse, yes. By the end of March, EBRD yes, we did not -- yes, because we got EBRD in April, yes, by the end of March, no. We got EBRD in April.
Okay. So there's no EBRD loan outstanding in that…
Yes, yes.
And then my last question is on the Slovenian operations. So the fourth quarter EBITDA was fairly low relative to prior periods. How do you see that operation looking in 2023? Should we think of EBITDA in the $60-plus million range? Or would it lag this year?
Your question about Perutnina, yes?
Correct.
No, we suppose yes, yes. I say today in presentation is the 2 issue. One of them, it is a current ratio between euro and dollars, yes. If currency ratio will be stable year-to-year, maybe its achievable, yes. It would be achievable. If currency ratio was not stable, it will be low, yes.
Okay. But for the total year, the euro-dollar hasn't moved that much. And I believe you did EBITDA around $7 million for the quarter?
No, I think this is yes, [ 65, 60, yes 65 yes, 67 yes. ]
Okay. And then of the CapEx and the investment in this region, what type of growth CapEx are we doing in Slovenia, is it all through the existing entity? Or is there M&A or? Trying to…
Yes, we had some expansion projects in Perutnina, yes. We started this project in 2021, especially in Serbia and Croatia. The total CapEx includes maintenance CapEx in Perutnina for this year, around $60 million, $70 million. Includes maintenance.
$60 million to $70 million.
Yes, $60 million to $70 million in group maintenance yes.
And how much?
How much what? Maintenance around $20 million, around $20 million.
Okay. So we're doing $40 million of growth CapEx and you have an estimate as to how much -- what's the return on that CapEx? Will there be incremental EBITDA?
No. Yes, it would be incremental EBITDA, but not 2023, it would be yes, because it's intended in 2024, yes -- '24 and 2025, yes. You know our expectation.
But do you know how much incremental EBITDA you will -- the project will return? So if we invest $40 million, will we receive an incremental $5 million to $10 million of EBITDA? Or is it higher or lower?
Yes. If you think about IRR, yes, it's very difficult to think about because a lot of different projects. There's not one project and a lot of different investments in different countries. You understand in Perutnina, not just Slovenia and a lot of countries. And -- but we see that our IRR of different project in the Perutnina in different projects, between 12, 15, sometimes even we invest money, even with IRR around 11%.
Okay. So 11% to 12% IRR.
Yes.
Unfortunately, we have no further time to take any additional questions. I'll pass the line to Anastasiya for the concluding remarks. Please go ahead.
Thank you very much, Michael. Thank you very much, everybody. That was a very interesting call. Definitely, as I see, we've got many questions which are required to be answered. And as far as you know my e-mail address, please forward your questions directly to me, or actually I can use the platform to take them from here, right. And we will be glad to answer them all. In case you require an extra conference call together with the team, please send me a message. Thank you very much, and have a lovely day. Bye.
Thank you.
This concludes today's conference call. We'll now be closing all line. Thank you. Goodbye.