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Cherkizovo Sees Profits Rise

03 March 2015

RUSSIA - Russian meat and agribusiness Cherkizovo Group saw revenue increase by nine per cent to $1,795.6 million in 2014 from $1,654.9 million in 2013.

Revenue in ruble terms increased by 30 per cent to RUB 68.7 billion compared to RUB 52.8 billion in 2013.

Revenue decreased by eight per cent to $421.9 million in the fourth quarter of 2014 compared to $460.0 million in the same period in 2013.

As a result of the devaluation ruble in the fourth quarter of the year, revenue in ruble terms in the quarter rose by 34 per cent to RUB 20 billion.

Cherkizovo produced more than 800,000 tonnes of meat products and 1.4 million tonnes of feed, reconfirming its position as a leading meat and feed producer in Russia.

Gross profit increased by 66 per cent to $594.1 million for 2014 from $358.4 million in 2013. Gross profit in ruble terms doubled to RUB 22.9 billion compared to RUB 11.5 billion in the previous year.

The growth is due mostly to “low base” effect after a challenging 2013.

Gross profit increased by 32 per cent to $156.1 million in the fourth quarter from $118.2 million in the fourth quarter of 2013.

Adjusted EBITDA increased by 143 per cent to $438.7 million for 2014 from $180.6 million in 2013. Adjusted EBITDA in ruble terms almost tripled to RUB 17.0 billion for 2014 from RUB 5.8 billion in 2013.

Adjusted EBITDA increased by 79 per cent to $116.4 million in the fourth quarter of the year from $65.1 million in 2013.

The company said that after a very challenging 2013, net profit for 2014 amounted to $345.7 million. Net profit in ruble terms increased more than six times to RUB 13.3 billion compared to RUB 2.1 billion in 2013.

Net profit was $122.0 million in the fourth quarter of the year (compared to $41.4 million in the previous year.

Sergei Mikhailov, Cherkizovo CEO, said: “2014 was a very strong year for Cherkizovo Group. We reaped the benefits from our strategy of long term investments in pork, made major steps towards solidifying leadership in poultry and further increased our vertical integration and profit margins.

“The Group not only completely recovered following a very challenging 2013, but was able to build a solid foundation for 2015, that will help us to cope with the very difficult macroeconomic environment we face now.

“In 1Q 2014 we acquired Lisko Broiler, part of our strategy to pursue market consolidation through M&A while strengthening our position as a leading branded poultry meat manufacturer. This deal added 90 k tonnes to our capacities, reaching an impressive half-a-million tonnes live weight.

“High pork prices following the veterinary import ban in March allowed us to compensate for losses in the pork division in 2013 and achieve record high profitability. The fact that we have our own raw pork meat production helped to stabilise activities of the meat processing division as well.

“Many sausage manufacturers had to freeze their production due a shortage of raw meat, but Cherkizovo’s meat processing plants were fully supplied with chilled meat from our farms.

“We have built a sustainable production chain, with almost 40 per cent of the pigs from our farms delivered to our own slaughtering facilities, and plan to increase this vertical integration further.
“The company continued to increase the level of its vertical integration in grain as well. Our grain harvest increased by almost 40 per cent, as the grain division had record high yields and high margins.

“Despite the difficult geopolitical environment, we continued to develop our Russian-Spanish Tambov Turkey project that enjoyed support from the Ministry of Agriculture.

“Construction is well underway, and we plan to launch production at the end of 2015.

“As for the Eletsprom project, we launched the first poultry production facility in Lipetsk Region and are preparing to launch a grain storage facility and hatchery. We have also started full renovation of the Dankov Meat Processing Plant in Lipetsk Region, which will be converted into a modern slaughterhouse.

“Following a strong year, we are pleased to have shared our success with shareholders.

“The company paid out RUB 1.5 billion in dividends, the first dividend in its history.

“Our intensions are to continue to grow for the benefit of our customers and shareholders.”


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