May 22, 2013

Cherkizovo expects 30% increase in grain yield in 2013

After it has completed a sowing campaign, Cherkizovo Group, one of Russia's leading integrated and diversified meat producers, expects a 30% increase in grain yield to 150,000 tonnes if favourable weather conditions continue.

"In 2013 the company will increase the planted land area from 35,000 to 40,000 hectares. Cherkizovo Group's agricultural land is located in the Voronezh and Orel regions, which lie in the fertile Central Black Earth region. Like last year, the main crops planted will be wheat, barley, corn, sunflower, oats, pea, soy and rapeseed," the press release said.

"Last autumn, the company sowed more than 15,000 hectares of winter wheat. Thanks to a snowy winter, the winter crops were completely preserved, and yield is projected at 42 centners per hectare. The remaining land is allocated for spring cultivation," Cherkizovo reported.

"Focusing on vertical integration, in 2012 Cherkizovo Group formed a separate grain division. According to last year's earnings, the grain division's sales exceeded 112,000 tonnes of grain crops, revenue totalled US$35.8 million, and the earnings before interest, taxes, depreciation, and amortisation (EBITDA) was US$13.8 million. The substantial increase in grain prices in 2012 enabled the company to achieve 38% EBITDA margin in the grain division," the press release said.

Cherkizovo boosted its consolidated net profit to US generally accepted accounting principles (GAAP) by 66% to US$225.2 million in 2012. Adjusted earnings before taxes, depreciation and amortisation (EBITDA) jumped 29% to US$314.6 million, and the EBITDA margin rose from 17% to 20%. Revenue climbed 7% to US$1.582 billion.