May 24, 2012

Cherkizovo says 2012 poultry price growth weak

Casting a shadow over first quarter profit figures that came in over analyst expectations, Russia's Cherkizovo said growth in poultry prices would be negligible in 2012.

The company, which has warned repeatedly that prices of its products will come under pressure following Russia's entry into the World Trade Organisation, said pork had held up in the first quarter but poultry had been disappointing.

"We see that poultry prices are growing very slowly and do not expect significant price growth in 2012; we remain confident about the future of the poultry market and continue to invest in poultry production," Chief Executive Sergey Mikhailov said in a statement.

Cherkizovo shares, which are down 14% in the year to date, dropped 5% in early trade but recovered to be down 2.5% by 0657 GMT.

The company said on Wednesday (May 23) its first quarter net profit more than doubled to US$39.3 million, beating market expectations, as growth in capacity fed through to the bottom line.

Analysts polled by Reuters had expected the net income figure to come in at US$35.7 million.

"Net income showed a record growth, driven by strong performance in the poultry segment, high pork prices, the efficient restructuring of the meat processing division and the decrease in grain prices," Mikhailov said.

First quarter revenue increased 16% on a dollar basis to US$357.8 million, while the group's gross margin increased to 26% from 21% in the same period last year.