Strong H1 growth for Cherkizovo
The company reported a 16% increase in revenues on a rouble currency basis and a 9% increase in revenues in dollar terms for the first six months to 2012. Gross profit increased 31% on a rouble basis and 23% to $208.6m, while net income increased by 56% on a rouble basis and 46% to $96.3m.
Commenting on the results, Sergey Mikhailov, chief executive officer of Cherkizovo, said: “I am pleased to report that Cherkizovo, Russia’s largest meat products and fodder manufacturer, has again demonstrated the effectiveness of its corporate strategy. In the first half of 2012, the Group produced more than 250,000 tonnes of high quality meat and meat products, and increased its net profit in rubles by almost one half, when compared to the same period in 2011.”
Poultry was one of the strongest performing segments, with total profit increasing by 99% to US$62.5 million. Volume sales increased by a third (34%) to around 158,345 tonnes in the first six months of the year, up from 117,990 tonnes in the same period in 2011, while sales value increased by 24% to US$400.5m.
“Cherkizovo’s poultry segment produced very impressive results. Sales have grown by one third, and the divisional profit doubled. This success was achieved by both organic sales and the contribution of Mosselprom, which was acquired in May 2011 and is now fully integrated,” said Mikhailov.
Pork profits flat
Pork sector profits remained flat at US$36.6m, with total volume sales increasing by 14% to 46,764 tonnes in the first half of the year and sales value increasing by 4% to US$128.8m, but operating expenses growing by 8% due to investment in the company’s greenfield complexes in Lipetsk, Tambov and Voronezh.
“We continue to benefit from high pork prices, caused by the deficit from African Swine Flu in some regions of Russia and a veterinary ban on imports of live pigs. We expect prices to remain relatively high for the remainder of the year,” Mikhailov said.
The company’s meat processing division saw a 54% increase in total profit to US$11.4m. This was despite a decrease in sales volumes, which fell 11% to 62,105 tonnes in the first six months of the year compared to the same period in 2011 as the result of the closure of a processing plant in Southern Russia.
“As a result of the effective restructuring of our meat processing segment and a shift to higher margin processed products, the Group achieved improved margins in this segment compared to the first half of 2011, albeit on lower sales volumes,” explained Mikhailov.
“We have focused on sales of more profitable value added products, like smoked sausages, and have reduced low-margin products like raw meat. As a result, the net profit of the meat processing segment has grown by one half, while the average price has increased faster than inflation.”
