“Profitability has suffered because of high volatility and an unfavourable price situation on the commodity markets,” said the company.
Meat production in 2011 totalled 63,500 tonnes (t), up 2% from 2010. Manufacture and sale of feed reached 58,000t, a 26% increase over 2010 results. In this situation, it remains unclear how the negative operating results will affect the company’s plans to expand its meat production capacities on the Russian market in coming years.
The company’s CEO, Maxim Basov, previously said that Rusagro would maintain the amount of investment of about RUB12bn (US$400m) in 2012, but this amount may be now revised due to the high volatility of the markets.
“Currently the company plans to increase pork production to 180,000-190,000t against 62,000t in 2011. In addition to large pork projects in the Tambov and Belgorod regions, Rusagro may have already run the same project in the Chelyabinsk region in 2012. Today, all major agricultural holdings in Russia, including Cherkizovo and Miratorg, are considering the increase of meat production as essential. This will lead prices to fall to European levels,” said Basov.
Revenue increased by 28% to RUB39.7bn (US$1.33bn). Gross profit decreased by 17% and adjusted EBITDA fell by 35% to RUB5.154bn (US$172.9m). The EBITDA margin dropped to 13% from 25% a year ago. Adjusted net income for 2011 totalled RUB3.092bn (US$103.7m), 40% lower than in 2010.
Net debt has increased by 37% since the beginning of 2011, reaching RUB11.8bn (US$396m) as of 31 December 2011. Total debt at the balance sheet date amounted to RUB31.9bn (US$1.07bn), up 64% compared with 31 December 2010.
Capex of Rusagro in 2011 reached RUB10.8bn (US$362m), which is 3.7 times higher than in 2010. In particular, RUB4.9bn (US$164m) was put towards the purchase of property and equipment in the company’s agricultural business segment, RUB4.3bn (US$144m) towards the meat division, and RUB1.5bn (US$50m) towards sugar production.