Ladies and gentlemen, thank you for standing by, and I would like to welcome you to MHP's Third Quarter 2024 results once more. At this time, all participants online are on the list. The first part of the day will be a presentation by my management team followed by a question-and-answer session. So without further ado, I would like now to pass the line to Anastasiya Sobotyuk. Please go ahead and keep your line open.
Thank you very much for the call. Dear stakeholders, good afternoon and good morning. Thank you for joining us today at the MHP's conference call dedicated to the third quarter and nine-month results. I am Anastasiya Sobotyuk, Director of Investor Relations. Together with CFO of MHP, Viktoria Kapelyushnaya, we will discuss MHP's financial and operational results, as well as the current operational environment and expectations for 2024, and of course going forward, taking into account the growing trend in the companies. Today's call is based on the press release and financial statements 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. We are going to slide number three of our presentation. A few words about our environment. First of all, an update about war impact.
Work continues, but MHP operations and results continue reflecting the resilience and agility of our business model and tremendous efforts of our workforce. Regular and frequent drone and rocket attacks against civilian energy and other infrastructure targets continued and have resulted in a challenging and disruptive operational environment leading to unforeseen war-related costs. In nine months of 2024, war-related costs in Russia amounted to $38 million. At the date of the publication, all our production facilities in Ukraine continue to operate at close to full capacity, and our own facilities have not suffered significant physical damage. We can, of course, give no assurance that this will remain the case and that our production facilities and the infrastructure that we use will not become a target of new attacks. Macroeconomic situation.
Taking into account that many businesses have been adjusting to the new operational environment, which remained unpredictably volatile in 2024, GDP growth during the third quarter this year is expected to be at 4%. Harvest this year is expected to be good, a bit lower than last year, at approximately 74 million tons. As of today, Ukraine harvested over 90% of the land. Let me now proceed with the company results for the third quarter of the year. We're going to slide number five. Let me start with operational highlights. Costs still decreased, as you can see, by approximately 8% in nine months of 2024, year-on-year, but remaining by a decrease in the volume of exports. Financial results for the nine months of 2024 were the following: Group's revenue remained stable at around $2.3 billion, with export revenue representing 60% of total revenue.
Adjusted EBITDA decreased by 33% to $437 million, mainly driven by strong and much stronger than expected results in agricultural division. Net debt to LTM EBITDA ratio continued at 2.1. Let's go to slide number six of our presentation. We see financials for the third quarter of 2024. So group revenue increased, as you can see from the diagram, by 5% year-on-year and reached $773 million. At the same time, driven by strong results in agricultural division and generated by the revenue pool, net profit increased by 75% and reached $173 million. And Adjusted EBITDA increased by 56% to $96 million. We're going on to slide number seven of our presentation, which shows us the results for nine months by segment.
As you can see from the table and diagram here, the biggest contributor to overall company results is the poultry and processed operations segment. The group generated the majority of total revenue, about 53%, and 49% of company EBITDA, with high EBITDA margin of 18% across all businesses. Second biggest contributor to EBITDA was agricultural division, 38%, with a significant contribution of $164 million to the group's EBITDA. Outstanding results and a second historical record during the last 10 years. Let us have a closer look at each business segment, and here I pass my word to Viktoria.
Thank you, Anastasiya. Good afternoon, everybody. Let's move to slide number ten. Sorry. Let's move to slide number eight. Despite the challenges of war in Ukraine, MHP performed good results in Q3, which outweighed Q2, mainly due to stable poultry price and increasing cost of production. Poultry price in Q3, both on export and domestic market, remained almost the same level as in Q2. Poultry costs in Q3 increased compared to Q2, mainly due to the high corn and electricity prices. We see further upward trends in costs in Q4 and into 2025. Commodity price release is a common challenge for MHP. To mitigate this, MHP is focusing on production and sales of non-commodity products. This requires a significant effort from our team and investments to launch new products and grow our market share.
We managed to increase in nine months this year our volume of non-commodity products by 10% in Ukraine and by 45% on export markets. Total share of non-commodity products in our purchase sales is 20% in volume and 30% in EBITDA. We will continue to concentrate on selling non-commodity products with focus on most marginal. A few words about our vegetable oil segment. Slide number nine. In Q3, our EBITDA for vegetable oil operation was similar to Q2. The decline in the vegetable oil results compared to the last year was primarily due to a drop in oil prices. In 2024, we had a negative trend in sunflower oil prices, which led to a decrease of oil production margin. We refused that margin of the segment in Q4, which declined further. Let's move to slide number ten, agricultural operations.
As of today, MHP harvesting campaign is complete on around 345,000 hectares of the land. Yield for spring crops are lower than in 2023. Especially corn, our yields are 8.4 tons per hectare. A lower yield of spring crops was due to unfavorable weather conditions, severe heat in the central region of Ukraine. However, starting from September 2024, there has been a significant increase in grain prices, which has increased our profit per hectare. Segment revenue in nine months amounted to $176 million compared to $138 million in nine months last year. This increase was mainly attributable to high sales volume and price of corn on export market. In the agricultural operation segment, EBITDA in nine months was $164 million compared to $42 million last period last year.
This result was driven by higher valuation of harvested agricultural produce and crops in the field due to the increased grain and oilseed price, partially offset by lower yield. Let's go to slide number 11. Several words about our European operating segment. In nine months, poultry sales of European operating segment increased by 9% year-to-year. Meat processing product sales were up by 4%. EBITDA of European operating segment in Q3 remained almost at the same level. EBITDA growth in nine months was driven by high sales in Croatia, Bosnia, and Serbia due to the strategic focus on these markets. Slide number 12. A few words about our cash flow and liquidity position. Cash flow from operations before working capital decreased to $290 million compared to $315 million last year. Investment in working capital amounted only to $25 million USD. This was mainly due to the increase in VAT reinvestment receivables.
Total CapEx in nine months amounted to $117 million. A marked significant increase compared to last year. CapEx is driven by extensive maintenance and modernization of operating facilities, construction on new bioenergy production facilities, investment in cost optimization and our culinary strategy project, and expansion of European production facilities. Regarding debt at the end of the period. Company total debt was $1.5 billion. Net debt approximately $1.2 billion. The liquidity position at the end was $327 million in cash, $165 million, which was held by the group in Italy outside Ukraine. Now I give the floor to Anastasiya for outlook. Thank you, Viktoria. Let me provide an outlook taking into account the war and operational environment and the current market drivers as well.
Considering the fast-moving nature of the war, MHP can give no concrete assurance as you understand that its production facilities and associated infrastructure will not be targeted or adversely affected in the future. In the event of future attacks, the group is fully prepared to respond immediately, taking all necessary actions to protect our employees and rebuild and restart production in the shortest time possible. We are proud to have a professional team and a business model which creates valuable sustainable results in operations. Despite the ongoing challenges, our commitment to ensuring sustainable development remains at the heart of all our economic activities. As a pioneer and innovative leader in biogas and bioenergy products in Ukraine, MHP is constantly working on boosting our energy dependence and resilience by integrating more renewable energy sources into our energy mix.
MHP continues to invest in alternative energy sources, and this is really important now taking into account what is going on in Ukraine and with the Ukrainian energy infrastructure in order to mitigate operational disruptions caused by Russia's targeting of Ukraine's national grid and energy sector. If energy disruptions lead to a complete blackout in Ukraine, MHP will not be able to operate at full capacity, and operations will face a significant increase in production costs, which will negatively impact financial results for your understanding. We remain incredibly grateful for the support and patience of our investors who have supported the group and, as indicated, the most difficult period in Ukraine's history. Let me conclude the presentation now, and we are ready for the discussion and your questions. Thank you for cooperation in advance.
Thank you very much for the presentation, Viktoria and Anastasiya. Ladies and gentlemen, we'll be now moving to the Q&A part of the call. If you're dialed in via the phone and if you want to ask a voice question, please press star two. That's a star two on your keypad for any questions. If you're dialed in via the web, you may also ask a voice or a text question. We'll give a moment or so for any questions to come through. Okay. We have first questions from Mr. Anton Hanyks from Knipepetato Management. Your line is now unmuted. Please go ahead.
Hey, guys. How are you? Very nice working relations. Hope you're well. Just a couple of questions. Year to date, you're basically at your prior full-year guidance for EBITDA. I'm curious, given we're now in late November, if you would give us perhaps a brief thought on how you think full-year P&L would like to evolve? And then conversely, CapEx is at its top, meaning for year over year, given all the initiatives you have outlined, but it seems to be tracking a little lower than your prior full-year expectations. So it would be helpful to hear your thoughts on if there's an updated CapEx guidance and then a couple of quick follow-ups? Thanks so much.
Thank you for the information. Yes. As I told during the presentation, our expectation is our result is good, mostly due to the result of our business for the agricultural sector. Our expectation for full-year today is around $500 million. Around $500 million. Regarding the CapEx in nine months, we invest in CapEx yet and CapEx we invest $220 and plus the revised acquisition. And that's why our total CapEx for nine months is around $250. Our expectation for full-year was approximately $300, maybe $310. Thank you.
Yes, yes. Obviously, despite EBITDA coming in higher and CapEx coming in the mid and low in a quarter or two ago, cash generation is an area where we still arguably fall short despite the EBITDA growth. Do we think 2025 is a year when we might actually see meaningful cash generation reduction in EBITDA? How are you thinking about it?
Thank you for the information. Regarding 2025, as I told you during the presentation, now our cost of production since the second half of the year is increasing, and we see that our cost of production next year will be slightly higher because fuel isn't for corn price, but anyway, corn prices will be determined and we have a better result in our agriculture, but at the same time, we have the high protein cost because production business and production operation business in Ukraine is not very favorable. Price of soybean into domestic market is also significant, and this is one of the reasons why protein is higher. The second, the third reason, price of gas and electricity increased and now increased significantly, especially compared to 2023 and compared to the beginning of the year.
That's why we see that the cost of production in green steel will increase next year approximately by 30%, around $40 million in steel. That's why we, at the same time, regarding price on domestic market and price on export market, we don't expect significant increasing, especially on export market. That's why if you speak about EBITDA for next year, our expectation will try always to be very conservative, and now we understand that our EBITDA will be around $450 million. It's very difficult to predict, especially in current situation. Anyway, we see this for the next year.
Finally, unrelated, any updates on how the war, what's happening there are very helpful to hear from a higher level on what's happening in Ukraine?
No, you know, the GBA is operating, and we have some issues, but I think that it is not a big business. But it is a business which is interesting for us, and we see that maybe we will increase slightly this business.
Thank you again. Good luck.
Okay. Thank you. We'll be moving now to the next question. The next question is from Agus Nyivi from Orit Keinan-Nahon. Please go ahead. Your line is now unmuted.
Hello. Can you hear me?
Yes, yes, yes.
Thank you. In relation to the Q4 results, I have two quick questions. The first related to the agriculture segment. Can you explain further what is behind the trend of the results in the agriculture segment, and how do you see that sustainable for the fourth quarter, maybe into the first quarter of 2025? That's the first question. The second one, can you elaborate a little bit more on also the liquidity that you have as of today, the liquidity sources cash in hand, and how do you see maturities in the next year or so? Thank you.
Yeah, yeah. The question about the profitability in our farming business, yeah, depends on the reason one of them is price. Yeah, you understand the price in Ukrainian market today always correlates with world price. Yeah, we can predict regarding because right now we have high significantly higher growth price compared to the year ago because cheap cost from Ukraine decreased significantly. Regarding grain prices, we know that the price depends of harvest, depends of climate conditions, not just in Ukraine, but in the UK, Brazil, and the trade is uncertain. If we put in our budget, the price very similar with current price because current price is not like at all because this is the average during which we had during the last five years. Regarding our liquidity position, current liquidity position is around $300 million.
Yeah, and for next year, next year our maturity long-term repayment is around $100-$900 million. Yeah, because we have a drawing line for today, today around $200 million. Okay, and we continue to work with banks, with other financial institutions to attract new loans because it's very important to have some additional possibility to have liquidity and on a drawing line.
Right. And just to clarify, I think we pointed out in the first question you say that attention to the drivers of high profitability in the agriculture segment is related to the price part of the logistical cost. And if you have to do directly with logistical costs, does it decline? Does it because of the port availability and the expectation to continue in the short term?
Yes, yes, you completely right. You completely right. Because yes, you completely right. Because now we use the Ukrainian ports, and previously it was also difficult way from Constanța, from other European ports.
Thank you.
Okay. Thank you. So a reminder to ask both questions. Please press star two on your keypad. That's a star two. And we'll give you a moment for any additional questions to come in. Okay. We have a question from Dmitry Ivanov from Jefferies.
Hello. Thank you for your invitation. I just have a quick question on your capital expenditure for the next year. I think you previously mentioned that you took some reduction in capital expenditure in the next year. Could you please maybe elaborate what's the number you wanted in terms of the capital expenditure for the next year, and what are the key items you assume when it comes to CapEx 2025? That would be helpful. Thank you.
Thank you for the question. First of all, capital for the next year, we keep it around $250-$270 million. Yeah, it is half of them. It is a maintenance CapEx and compliance CapEx which we will apply in Ukraine and in Balkan region. And we have approximately $70-$80 million CapEx expense in Balkan. We plan to increase our capacity. And plus CapEx which allows us to implement our strategy, go to the culinary companies to produce more and more non-commodity products. It remains the other of our CapEx. Thank you.
Okay. Thank you very much. And when it comes to M&A acquisitions, like any new acquisitions this year, like this number, like 250, does it include only CapEx or some potential M&A might be on top of this number? Just to clarify. Thank you.
Yeah, yeah, yeah. I told you about CapEx because the same situation that we had this year. Our CapEx for nine months was $220, and total for them we have approximately $40 million in the acquisitions. Yeah, acquisitions one of them we did growth in the culinary and we provided it in Ukraine too. Yeah, only CapEx $450.
Okay. Thank you very much. So basically, to summarize, around $450 million EBITDA next year, $250 million in CapEx coupled with maintenance, and on top of that, there will be some M&A related expenses if you decide to proceed with any new acquisitions. Okay. Thank you very much. That's all from me. Thank you.
Okay. Thank you. So we'll be now moving to the next question from Magnus Herman from Octopus. Please go ahead and have your line open now.
Hi. Thanks for my question. I wanted to return to the point about energy resilience and energy use. How much of that of the CapEx for next year goes to these new energy projects? And could you talk a little bit about the longer-term target in terms of power production? And then finally, you mentioned your production cost will rise by 30% next year. How much does energy contribute to that rise? Thank you.
Yeah. Thank you for the question. This year we invested in different energy projects, approximately $50 million. For next year, it will be around $10-15 million. Yeah. Regarding increasing another 20%, yes, we see and put increasing in gas and electricity, approximately 10-8% from increasing energy.
Okay. Thank you.