September 15, 2011

Cherkizovo's H1 profits dip 15%

Cherkizovo reported on September 14 that net income declined 15% to US$62.04 million from January-June while operating income plummeted 19% to US$70.9 million.

Cherkizovo said that prices rose across their poultry, meat processing and pork division but lower profits came despite sales growing 15% to US$647.22 million.

However, Cherkizovo's profits did improve in the second quarter of the year. Net income increased 6%, while operating income up 1%.

CEO Sergey Mikhailov said the company had "delivered a strong set of results" despite a "challenging operating environment".

Mikhailov was optimistic that the pressure on costs could lessen. "We welcome the Government's recent decision to offer direct subsidies to offset sharp cost increases, and allow domestic producers to continue developing quality local products, despite difficult trading conditions. Moreover, the current grain harvest is turning out to be favourable for Russia, which, we expect, is set to further stabilise input costs."

He said that in general, they expect normalised profitability levels to return in the second half of the year which is already demonstrated in the second quarter, and this will offset the negative impact of the performance in the first quarter. The management is also optimistic that they are on track to meet expectations for the full year.