May 29, 2014

 

Cherkizovo reports 2% drop in revenue in Q1 2014

 

 

 

Cherkizovo Group, Russia's largest meat and fodder producer, has seen its revenue fall by 2% to US$376.6 million during the first quarter of 2014, according to financial results for the period ending March 31, 2014.

 

This is in comparison to US$383 million recorded last year. The drop has been attributed to the weakening Russian currency against the USD.

 

Still, Sergei Mikhailov, CEO of Cherkizovo, believes that the company has demonstrated very strong results in the first quarter.

 

"The market environment was quite favourable throughout the quarter. Grain prices were relatively stable, while poultry meat and pork prices started to increase. Due to a shortage on the pork market and stoppage of imports, growth of live hog prices was very rapid starting in March. As a result, Cherkizovo Group, which completed its long-term investment programme in the pork division last year, could gain a strong financial return from these investments," Mikhailov said.

 

The company's gross profit has seen an increase of 48% at US$95.1 million, from US$64.4 million recorded in Q1 2013. The gross margin has also climbed to 25% from 17% in the previous period.

 

Adjusted EBITDA has doubled to US$56.2 million from US$28.4 million in 2013. Adjusted EBITDA margin increased more than two times to 15% from 7%.

 

The net Profit for Q1 2014 amounted to US$25.0 million against the net loss of (US$0.6 million) last year.

 

The net margin was 7% during Q1 2014. Cherkizovo's net debt was US$808.9 million as of the same period.

 

In another development, Cherkizovo Group has acquired LISKO Broiler in the Voronezh region, one of Russia's largest poultry producers. The deal helped Cherkizovo to increase its market share to 13%, marking an important step to the dominance of the poultry market.

 

In the meantime, the operational land bank of Cherkizovo's Grain Division was increased to 58,000 hectares as compared with 40,000 hectares in 2013. Expecting a harvest of approximately 250 thousand tonnes of grain in 2014, the company has also invested in modern high-tech agricultural equipment in order to promote the efficiency of the grain segment.

 

This year also saw Cherkizovo's launch of a case-ready production line at the Cherkizovsky Meat Processing Plant in Moscow. The line allows for 100 tonnes of ready-to-cook meat products to be produced daily.