Q4 Results Show 2016 a Milestone Year for Cherkizovo Group

RUSSIA - Cherkizovo Group, the largest vertically integrated meat and feed producer in Russia, reports that its results for the fourth quarter (period ending 31 December 2016) have revealed that it has reclaimed its status as the country's top meat producer.
calendar icon 2 March 2017
clock icon 4 minute read

Cherkizovo Group started to export poultry meat to new markets, including Egypt, Tanzania and Angola. Shipments to Egypt and Tanzania began in August, while the first batch to Angola was dispatched in November. The Company is currently pursuing ways to enter new markets in the Middle East, Southeast Asia and Africa.

A new Board of Directors and Chairman of the Board were elected. A new structure is now in place to give an increased role to the independent directors to support them in further enhancing corporate governance and formulating Cherkizovo’s development strategy.

The modernisation of the Mosselprom poultry production cluster was completed. 24 new poultry houses have been launched, boosting annual production volume by 12,000 tons.

The second phase of the pork cluster project in Voronezh was completed in June. The first phase in Lipetsk is currently under way. Both sites will be fully completed in 2017, boosting production capacity by 70,000 tons per year.

The first cluster of the new parent stock-breeding farm was completed in Elets (Lipetsk region), which is a key step towards import substitution and will help the Group to achieve self-sufficiency in hatching eggs.

The Tambov Turkey project became operational. In 2017 it will reach full production capacity of 50,000 tons of live weight.

Cherkizovo Group implemented the SAP ERP solution on the HANA platform at the Petelino Trading House. The project was launched simultaneously across 14 sites and provides a centralised platform to help streamline operations and improve efficiency.

A new research laboratory, the most advanced of its kind in Russia, was put into operation. Its ultimate goal is to increase the quality and biosafety of Cherkizovo’s products.

Cherkizovo Group CEO Sergei Mikhailov said: "2016 was a milestone year for Cherkizovo Group. We reclaimed our status as Russia’s top meat producer after increasing total meat product sales by 9 per cent year-on-year to 903,000 tonnes.

“We completed a number of landmark projects during 2016 and achieved significant progress on our strategic initiatives, particularly around building our export portfolio. The Tambov Turkey Project, a joint venture between Cherkizovo Group and Fuertes, Europe’s leading turkey producer, became operational in 2016, which boosts our live weight production capacity by approximately 50,000 tons per year. We also launched our new state-of-the-art, in-house laboratory, which is unique to the Russian agricultural sector and is critical for the company to maintain and improve its quality and innovation leadership.

"Financially, the year was mixed. Following a particularly challenging market environment with unusually low prices in early 2016, market conditions gradually improved throughout the year. Despite a disappointing first part of the year, we were able to deliver a strong set of operating results across all business divisions. Group revenue stood at RUB 82.4 billion, a year-on-year increase of 7 per cent, which was largely driven by the poultry and meat processing segments. The latter performed particularly strongly and saw sales rise by 14 per cent year-on-year to 218,085 tons in 2016.

“Our focus on enhanced operational efficiency across all segments has already helped to deliver an uptick in EBITDA, with an 83 per cent year-on-year increase in fourth quarter EBITDA. We are confident that our continued efforts, combined with the anticipated improvement in Russia’s macroeconomic situation, will help us perform well in the year ahead."

You can get further information on Cherkizovo's fourth quarter financial highlights and full-year 2016 financial highlights by clicking here.

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