Cherkizovo aims high with new production target

By Vladislav Vorotnikov

- Last updated on GMT

Cherkizovo aims high with new production target

Related tags: Poultry, Pork, Processing equipment & plant design

Russian meat giant Cherkizovo has said it plans to produce 1.1 million tonnes (t) of meat in live weight in 2019, 19% up on the previous year.

Andrey Dalnov, senior analyst at Cherkizovo, told GlobalMeatNews​ the company would become the first meat manufacturer in the post-Soviet era with a production performance exceeding one million t.

The main growth in production is expected in its broiler meat segment, where it planned to increase output from 626,000t in 2018 to 769,000t in 2019, said Dalnov. This should be achievable, given Cherkizovo’s recent acquisitions of Altai Broiler and Belaya Ptitsa Kursk, he added. 

Cherkizovo purchased Altai Broiler for RUB4.6 billion (US$80m) and Belaya Ptitsa Kursk for RUB6.5bn (US$100m), with both deals completed in late 2018.

Altai Broiler’s production capacity is around 60,000t of broiler meat per year, and Cherkizovo said it planned to increase that figure to 100,000t per year over the next few years. The company added that this acquisition was important to the company as it would enable it to strengthen its position in Siberia. 

Belaya Ptitsa Kursk owns a production complex designed for 120,000t of broiler meat per year in Kursk Oblast. The company had stopped operating due to the financial difficulties, but Cherkizovo said that, following the acquisition, it planned to restart production within the first quarter of 2019. 

In the pig sector, Cherkizovo was aiming to boost production from 250,000t in 2018 to 284,000t in 2019, revealed Dalnov. This growth forecast was attributed primarily to an increase in production at its farms in Voronezh Oblast, Lipetsk Oblast and Penza Oblast, all located in Central Russia. Earlier, Cherkizovo had announced plans to gradually increase pork production in this part of the country.

Early in 2019, the company revealed it would invest an additional RUB7.7bn ($110m) to build some new pig farms in Lipetsk Oblast.

New sales channels

Cherkizovo has increased production rapidly, despite the domestic meat market in Russia being close to self-sufficiency on poultry and pork, and import-replacements no longer driving the development plans of the country’s largest meat producers. In this regard, Cherkizovo said it planned to focus on developing exports and new sales channels.

Russia’s meat market is still the main one for Cherkizovo, while the target for exports’ share of revenue is set at 10-15%​,” said Dalnov.

Another promising channel was HRI – hotels, restaurants and government institutions – he said.

Cherkizovo is already one of the main suppliers​ [of meat] in the restaurant networks and plans to become one of the main suppliers for government agencies and state-owned companies. This segment could generate between 15% and 20% of our revenue. The so-called hybrid deliveries – to the restaurant networks abroad – are of particular interest to the company​,” Dalnov added.

The HRI sector currently generates only 5% of Cherkizovo’s revenue, the company revealed earlier.

In the first quarter of 2019, Cherkizovo increased net revenue to RUB26.7bn (US$400m), up 24.6% on the same period in 2018, the company reported on its website. Net profit increased by 8% to reach RUB3.2bn (US$45m).

Related topics: Meat

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