August 12, 2010

Cherkizovo Group's poultry sales up 8% on-year

Cherkizovo OJSC has reported the total sales volume of its poultry division in the first half of 2010 to increase by 8% to roughly 99,860 tonnes of slaughter weight, against last year's estimated 92,840 tonnes.

Prices for Cherkizovo poultry sales increased by 5% in dollar terms from US$2.19 per kg in the first half of 2009 to US$2.30 per kg in the first half of 2010 (excluding VAT). Prices in rouble terms decreased by 4% from RUB72.32 (US$2.36) per kg in the first half of 2009 to RUB69.11 (US$2.26) per kg in the first half of 2010 (excluding VAT), this reflected normalisation of prices from the unusually high levels in 2009. The start of the third quarter saw an upward trend in prices for poultry sales, as the summer holiday season progresses. Going forward, we expect poultry prices to remain relatively strong for the remainder of the financial year.

First half sales volumes in the pork division increased by an impressive 75% to about 37,160 tonnes of live weight, this compared favourably to approximately 21,250 tonnes in the first half of 2009. This growth reflected increased production as Cherkizovo's new farms start to reach their forecasted target levels.

Prices increased by 5% in dollar terms from US$2.28 per kg of live weight in the first half of 2009 to US$2.40 per kg of live weight in the first half of 2010 (excluding VAT)*. In rouble terms prices decreased by 4% from an exceptionally high level of RUB75.41 (US$2.46) per kg in the first half of 2009 to RUB72.07 (US$2.35) per kg in the first half of 2010 (excluding VAT). The third quarter has so far seen stable prices in the division and we expect them to remain largely flat going forward.

In the first half of 2010, the company witnessed a recovery in demand for the division's products, as sales volumes in the meat processing segment increased by 8% to approximately 66,200 tonnes from approximately 61,550 tonnes in the first half of 2009.

Division prices in dollar terms increased by 13% from US$3.37 in the first half of 2009 per kg to US$3.81 per kg in the first half of 2010 (excluding VAT)*. Average prices in roubles increased by 3% from RUB111.42 (US$3.64) in the first half of 2009 to RUB114.66 (US$3.75) in the first half of 2010 (excluding VAT).

Sergey Mikhailov, CEO of Cherkizovo Group said, "In the first half of 2010 Cherkizovo performed strongly across all segments, reflecting the increased demand for our products, primarily driven by the decrease in imports and subsequent demand for high quality domestic meat. To date, the adverse weather conditions and fires in Central Russia, have not affected any of Cherkizovo's poultry or pork farms. Accordingly, we expect to achieve targeted levels of production for 2010."