One of the main reasons for the hike in profitability was the growth in sales of expensive products. Its plant in Belgorod Oblast last year boosted sales of semi-finished products by 42% year-on-year to 33,300 tonnes (t), while the Miratorg-West division in Kaliningrad, which is one of the suppliers of McDonald’s restaurants in Russia, increased manufacture of ready-to-cook products by 33% year-on-year to 30,900t.
"The past year has proved the correctness of our strategy on import substitution [on the meat market] and large-scale investments in the real economy," commented Miratorg’s CEO Viktor Linnik.
In 2014 Miratorg’s total sales increased by 14% to 493,000t. The share of own products in overall distribution amounted to 77%. Net income jumped by 70% year-on-year to RUB16.4bn (US$273m). The company’s management also said that this rise occurred mostly in the second half of the year.
"Net profit increased in the second half of 2014, on a backdrop of favourable market conditions, growth in sales of poultry products and commissioning of our new beef production facilities," added the press service.
Miratorg’s EBITDA amounted to RUB23.2bn (US$386m), with rising prices on the domestic market and a fall in import supplies to Russia of most types of meat products.
Competitors also enjoy strong operational results
Miratorg’s main competitor on the Russian market, the Cherkizovo group of companies, also reported significant growth in its key financial and operational performance in 2014. The firm’s revenue increased by 30% to RUB68.67bn (US$1.14bn), while net profit jumped by more than six times, compared to 2013, up to RUB13.32bn (US$222m).
"We enjoyed high prices on the domestic market, which jumped after the implementation of the [pork] import ban from Europe in March 2014, in response to the outbreaks of African swine fever (ASF)," said a statement from Cherkizovo’s press service.
Another large player in the Russian market, RusAgro Company, also increased sales revenue by 57% year-on-year to RUB65.68bn (US$1.09bn). The company reported that a major contributor to growth was the substantial price rise in pork products.
Last year RusAgro’s pork prices on the domestic Russian market increased by 49% year-on-year to RUB96,900 (US$1,615) per tonne. By comparison, Cherkizovo’s pork prices jumped by 47% year-on-year to RUB96,250 (US$1,604) per tonne. Miratorg did not disclose information on the average prices for its products on the market.