Cherkizovo Q1 results – 8% hike in revenue

Cherkizovo Group, Russia’s leading integrated and diversified meat producer has released its quarterly results for the period ended 31 March 2013, which shows an 8% revenue increase on Q1 2012.

Highlights

Revenue increased by 8% to $385.0 million for 1Q 13 from $357.3 million in the first quarter of 2012
Adjusted EBITDA decreased by 54% to $28.4 million for 1Q 13 from $62.5 million in the first quarter of 2012
Adjusted EBITDA margin decreased to 7.4% from 17.5% in the first quarter of 2012
Gross Profit decreased by 34% to $63.3 million for 1Q13 from $96.0 million in the first quarter of 2012
Group’s gross margin decreased to 16.4% from 26.9% in the first quarter of 2012
The company showed Net Loss of $0.6 million compared to Net Income of $39.8 million in the first quarter of 2012
Net Debt was $846.8 million at the end of the first quarter of 2013
The effective cost of debt was 2.6% (1Q12: 1.9%)
Net Loss per share was at $0.01
Operating Cash Flow was at $30.7 million

Sergei Mikhailov, Cherkizovo CEO, commenting on the results said that the first quarter was extremely challenging for all meat manufacturers in Russia, our company included. Grain prices reached historic highs with a peak in February.

“We welcome the government’s decision to increase its support for the agricultural sector. It is expected that direct subsidies will amount to 9 rubles per kilogram for pork and 3.5 rubles per kilogram for poultry. These subsidies will be distributed based on Q4 2012 production volumes, so the Cherkizovo Group should receive approximately 600 million RUR in subsidies. “ Mikhailov said.