February 6, 2018

 

Cherkizovo Group has announced last month its operating results for the twelve months ended December 31, 2017.

 

Poultry division

 

Sales volumes in 2017 increased by 4% year-on-year to 522,500 tonnes from 500,321 tonnes in 2016, with similar growth dynamics in the fourth quarter of 2017 versus the third quarter (up 5% quarter-on-quarter to 137,123 tonnes).

 

The growth was driven by improvement in a number of operational metrics across core assets of the division.

 

In 2017, the average selling price declined by 4% year-on-year to RUB88.84/kg (US$1.55/kg) mostly due to the higher base effect of 2016 and low summer season. In the fourth quarter of 2017 average selling price declined by 3% quarter-on-quarter to RUB85.20/kg (US$1.48/kg).

 

Cherkizovo's turkey facility in Tambov, Russia, reached full capacity of 45,000 tonnes/year in October 2017 with sales of 10,009 tonnes in the fourth quarter. The average sales price for turkey products amounted to RUB145.24/kg (US$2.53/kg) in 2017 and RUB129.03/kg (US$2.25/kg) in the fourth quarter, respectively.

 

Pork division

 

Production volumes in 2017 increased by 15% year-on-year to 211,750 tonnes (184,766 tonnes in 2016) while production volumes of the fourth quarter were up 25% quarter-on-quarter and amounted to 63,028 tonnes versus 50,353 tonnes in the third quarter. Positive dynamics, both on the year-on-year and quarter-on-quarter basis, are attributed to the launch of new wean-to-finish facilities that Cherkizovo completed and populated over the course of the last two years, and constant enhancement in the company's production metrics driven by its long term genetics improvement and animal health programmes launched in prior years.

 

In 2017, the average selling price increased by 3% year-on-year to RUB90.77/kg (US$1.58/kg) mostly due to the increased purchasing power of domestic consumer.

 

In the fourth quarter, average selling price declined by 10% quarter-on-quarter to RUB83.75/kg (US$1.46/kg).

                                                                  

Meat processing division

 

Sales volumes in 2017 increased by 9% year-on-year to 236,638 tonnes from 218,085 tonnes in 2016. In the fourth quarter, volumes increased by 15% quarter-on-quarter to 69,293 tonnes. Main drivers of growth are Cherkizovo's increased market share in modern retail chains and further growth of its branded offering of sausages and pork products.

 

In 2017, the average selling price remained flat compared to previous year and amounted to RUB147.65/kg (US$2.57/kg). Average price was supported by Cherkizovo's efforts in increasing value-added products in the sales mix. In the fourth quarter, average selling price declined by 6% quarter-on-quarter to RUB141.51/kg (US$2.46/kg).

                                               

Grain farming division

 

In 2017, sales volumes in the segment were positively impacted by NAPKO consolidation. Average sales price in 2017 declined by 21% year-on-year to RUB7.01/kg (US$0.12/kg) reflecting elevated levels of supply on the domestic market.