February 24, 2011

Black Earth Farming's 2010 sales profit drops 40%

Black Earth Farming Ltd., a Russian grain producer, said Wednesday (Feb 23) its 2010 sales income fell by 40% despite surging grain prices as the Kremlin's ban on grain exports affected the sales.

The company reported a net loss from continuing operations of RUB1.3 billion (US$42.5 million) last year, roughly on par with its loss in 2009. Loss per share was RUB10.39 (US$0.356) against RUB10.37 (US$0.355) over the same period in 2009.

Much of the fall in profit was down to a 55% slump in sales volumes compared with the previous year after the Kremlin banned grain exports. "The majority of the harvest [was] still kept in inventory at the end of 2010," the company said.

Although average grain prices rose 32% on-year to RUB4,989 (US$170.98) a tonne, Black Earth's inventory valuation stood at RUB1.14 billion (US$39.07 million) at the end of 2010. The company said this undervalued the stocks by RUB135 million (US$4.63 million) compared with market prices on December 31.

Black Earth's report comes as the Kremlin is deliberating whether to extend the ban on grain exports beyond July 1. The government halted shipments after devastating drought and fires wiped out harvests in 28 Russian regions last year, sending grain prices surging.