Fitch affirms MHP's rating at 'CC', highly appreciates acquisition of Spanish UVESA
Fitch Ratings affirmed the long-term issuer default ratings (IDRs) of agricultural holding MHP in foreign and national currencies at 'CC', the company's senior unsecured rating was affirmed at 'C' with an asset recovery rating of 'RR5'.
"MHP's ratings continue to reflect a challenging operating environment in Ukraine, the company's core production and sourcing region, and high refinancing and liquidity risks, which together lead to a high probability of default. The ratings assume MHP will remain able to refinance its existing short-term credit facilities for its operating needs, although access to new funding is likely to remain limited in the near term," the agency said on its website.
According to Fitch, the imminent repayment of $550 million in bonds in April 2026 exposes MHP to high refinancing risks due to capital control restrictions imposed by the National Bank of Ukraine, despite sufficient liquidity to continue operations and service debt.
"We anticipate that the company's available cash balance of USD 165 million at end-2025 and expected free cash flow (FCF) generation in 2025 will be insufficient to meet its principal payment. In addition, cash kept outside Ukraine must be repatriated within 120-180 days, which would further constrain MHP's ability to service its foreign-currency debt. Absence of viable refinancing options by the bond maturity would likely lead to a downgrade," the agency said.
Fitch also said MHP's operations remain highly dependent on the ongoing availability of working capital to finance seeding campaigns, ensure business continuity, and export capabilities.
At the same time, the agency forecasts that MHP will maintain access to loans from international institutions/development banks to ensure operational continuity until 2030. Liquidity is also supported by a strong Fitch-adjusted cash balance of $330 million at end-2024 (about 65% held outside Ukraine), but this could deteriorate quickly given limited access to capital markets for Ukrainian corporations.
Fitch forecasts a broadly stable EBITDA of $439 million for the agroholding in 2025 (up from $433 million in 2024), as cost inflation, such as higher commodity prices and personnel costs, is partially offset by price increases and continued product mix premiumization.
The agency expects the acquisition of Spanish chicken and pork producer UVESA's MHP to add 23% to revenue in 2026. This will slightly dilute its EBITDA margin to 13% in 2026, before recovering to 13.5% by 2027.
"We assume the deal will be financed with a mix of cash from the balance sheet and additional debt. The transaction is scheduled to be finalised by September 2025, and will enhance MHP's presence in the European processed poultry market," Fitch said.
The agency highly appreciated MHP's exports of grain, oil, poultry meat and poultry products to over 80 countries in 2024. At the same time, Fitch points to the agricultural holding's dependence on the Black Sea route, despite the availability of alternative options. "Any further military escalation affecting MHP's logistic environment may lead to additional logistic and transportation costs," the agency said.
Fitch forecasts that MHP's revenue will grow by 2.2% in 2025, and then by 23% in 2026 due to the full integration of UVESA into MHP's structure; after that, annual revenue growth normalizes in the low single digits.
At the same time, EBITDA margin will be 14.1% in 2025 and will decrease to 13% in 2026, mainly due to the dilutive effect of the UVESA acquisition. Capital expenditures by 2028 will increase from $220, to $250 million.
The agency also expects MHP's working capital to increase from neutral to positive in 2025, and forecasts that it will be negative at about $30 million in 2026. Fitch sees no reason to pay dividends.
MHP is the largest producer of chicken in Ukraine. It processes 360,000 hectares in 12 regions of Ukraine. It is engaged in the production of grains, oil, and meat products, which it exports to more than 80 countries.
The company has production facilities in Ukraine and Southeastern Europe, and also has subsidiaries in the Netherlands, the UK, the UAE, Saudi Arabia and the EU.
