September 27, 2013

Russia's Miratorg reports profit drop in H1 2013

Russian meat giant Miratorg has recently published negative financial results for the first half of 2013.

In January- June of 2013, Miratorg reduced net income by one-third or 34%, to RUB3.75 billion (US$117 million), compared with the same period in 2012. Profitability during this period fell by almost half, amounting to about 15%, whereas in the first six months of 2012 it had stood at 27.8%.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) decreased from RUB7.7 billion (US$241 million) to RUB6.3 billion (US$197 million). The net profit margin fell by 46.2%. However, Russian marketing experts generally agree that the problems of the holding firm are temporary.

"In recent years Miratorg's profit grew extremely rapidly up to 80% in the quarter and it can be concluded that the increase was too fast. It is likely that what we are seeing right now is not a negative trend, but the short-term correction of that previous growth trend. Miratorg's growth potential is far from being outspent," said Russian agricultural analyst Eugene Gerden.

The negative performance can be explained by severe price fluctuations in the Russian pork and feed markets this year, which affected all the largest Russian meat producers, according to experts. Meanwhile, representatives of the company said that, due to changes in the production line, the company was likely to regain its position in the second half of 2013.

"We plan to significantly improve our financial performance in the second half of the year, due to the launch of 13 production lines for 'case-ready' products, thereby increasing our production volume," said Miratorg vice-president of finance Vadim Kotenko.