February 2, 2017

Cherkizovo Group announces 2016 operating results




Cherkizovo Group has announced its operating results for the twelve months ended December 31, 2016.

In 2016, the company sold 903 thousand tonnes of meat products, reclaiming its status as Russia's top meat producer. Cherkizovo's sales volume increased 9% year-on-year with particularly strong sales in the grain farming segment, which grew by 27% year-on-year to 339 thousand tonnes.

Poultry Division

In 2016, sales volume increased by 6% year-on-year to 500,321 tonnes of sellable weight, from 470,432 tonnes in 2015. This growth was driven by higher production levels, which were a result of improvements in efficiency and the launch of new poultry houses at the Mosselprom production facility. The average price during 2016 was flat compared to the previous year and stood at RUB94.94/kg (US$1.58/kg). On a quarter-on-quarter basis, sales volume increased by 7% to 128,250 tonnes of sellable weight. This growth was due to higher sales of branded, deep processing and ready-to-cook products, which were aided by the diversification of the geographies these products are sold in. In the fourth quarter, the average price grew by 6% quarter-on-quarter to RUB102.72/kg (US$1.71/kg) from RUB96.89/kg (US$1.61/kg) in the third quarter.

For the full year of 2016, sales volume in the pork division increased by 9% year-on-year to 184,766 tonnes. This was primarily due to a new genetics improvement strategy launched by the management at the beginning of the year to improve pigs' health status and efficiency by increasing livability and weekly farrows. The launch of two new wean-to-finish sites in the Voronezh region also helped to boost sales. On a quarter-on-quarter basis, sales volume grew by 19% to 53,184 tonnes and was driven by higher production levels, which the Group started to see in the fourth quarter of 2015, and additional market hog sales from new wean-to-finish sites in September and October of 2016. In 2016, the average price decreased by 10% year-on-year to RUB88.28/kg (US$1.47/kg); on a quarter-on-quarter basis, it fell by 1% to RUB92.46/kg (US$1.54/kg). This drop was a result of Russian consumers’ lower purchasing power and an overall increase in pork production across the country.

Meat Processing Division

During 2016, sales volume in the meat processing division grew by 14% year-on-year to 218,085 tonnes from 191,200 tonnes in 2015. This increase was a result of production growth of non-sausage products. In 2016, the average price fell by 3% year-on-year to RUB167.84/kg (US$2.80/kg) due to non-sausage products representing a greater share of sales. On a quarter-on-quarter basis, sales volume increased by 7% in the fourth quarter to 59,438 tonnes. The average price decreased by 1% quarter-on-quarter to RUB170.33/kg (US$2.83/kg) due to sausages and B2B/B2C products representing a lower share of the product mix in the fourth quarter.    

Grain Farming Division

Sales in the grain farming segment grew by 27% in 2016 to 338,808 tonnes of various crops, compared to 267,371 tonnes in 2015. This positive dynamic was driven by a 41% increase in the Group's harvest to 467,916 tonnes, compared to 332,866 tonnes in 2015. The average crop yield of the Group's cultivated land increased by 47% to 57.5 t/ha, while the Group's tillable land area grew by 4% year-on-year to 94,814 ha.

The average price for 2016 fell by 6% year-on-year to RUB8.83/kg (US$0.15/kg) as a result of a record harvest in the country.

- Cherkizovo

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