August 18, 2020

Cherkizovo reveals growth drivers for 2020

Rustam Khafizov, chief analyst at Cherkizovo Group, recently took part in the online conference "New Challenges for Economy and Agriculture" hosted by Agroinvestor Magazine, Cherkizovo said this month.

Company representatives and experts attending the event discussed the challenges and trends facing the industry in the wake of the COVID-19 pandemic and shared expectations about future market developments.

The COVID-19 crisis and the restrictions imposed to contain it impacted Cherkizovo's sales channels. While the retail chain demand rose, HoReCa sales plummeted by almost 90% in the spring of 2020. The HoReCa segment has now rebounded, and the retail demand for meat products remains stable. At the same time, Russia's southern regions are seeing a seasonal growth in sales, said Khafizov.

The pandemic and temporary difficulties with shipments to China did not interfere with the Cherkizovo's export plans, the company said.

"A key driver for the company's business this year will be export growth, primarily to Southeast Asia. While in Q2 2019 exports accounted for only 5% of the group's total sales, in Q2 2020, they were up to about 10%. We are working to further increase our exports potential with plans to take shipments to non-CIS countries in 2020 past the previously announced US$100 million mark," said Khafizov. Cherkizovo seeks to expand its exports geography, he added.

In February, Cherkizovo launched poultry shipments to the United Arab Emirates (UAE).

Participants also addressed the effect of the growing FX rates on the industry, pointing to the fact that veterinary drugs, feed ingredients, soybean meal and some other materials are largely imported. "The price of these ingredients is increasing, and this trend is likely to continue through the end of the year. Avoiding the impact on end product pricing is of major importance. We need to make sure that the price for the consumer remains comfortable," noted Khfizov.

The online conference was attended by representatives of agricultural businesses, research institutes, government agencies, banks and major industry associations, including the National Union of Swine Breeders, the Russian Union of Poultry Producers, the Russian Grain Union and the Russian Union of Milk Producers.

- Cherkizovo