Poultry growth boosts Cherkizovo earnings

Cherkizovo Group, Russia’s largest integrated and diversified meat producer, has reported increased revenues of 7% on a US Dollar basis to $1,581.7 million in 2012 from $1,472.6 million for 2011.

Recent business developments include continued development of Elets integrated poultry production facility. Construction has started on a new elevator; sourcing is underway for the 120 tonnes per hour feed mill supplier; and equipment has been purchased for the 240 million egg incubation hatchery.

The company also has an agreement to set up a turkey meat production joint venture with Spain’s Grupo Fuertes was signed. The new plant, due to be operational in 2014, will be in the Tambov region of Russia, with more than EUR 100 million invested in development of the project. The annual capacity is expected to be 25,000-30,000 tonnes of turkey meat, and may be increased to 50,000 tonnes in the medium term.

“Cherkizovo Group has delivered a very solid performance in 2012. Being the largest meat company in Russia, we achieved significant new milestones: more than $1.5 billion in revenue, more than half a million tonnes in output and EBITDA of over $300 million,” said Sergey Mikhailov, Chief Executive Officer of Cherkizovo Group.

“The Poultry division displayed impressive results: sales increased by 22%, and EBITDA in the division increased by 57%. The Poultry division supplied half the revenue and more than half the profit of the Group. The full integration of Mosselprom, which was acquired in 2011, and the expanded capacities in the Penza and Bryansk clusters positively affected 2012’s earnings as well as strong pricing environment. In early 2013 we completed plans for doubling production capacity in the Penza and Bryansk clusters, reaching installed capacity of 390 thousand tonnes p.a. live weight, and we are planning double-digit growth this year.

“2013 looks very challenging as grain prices are currently at historical highs and pork prices are at historical lows. This combination will negatively impact the Company’s performance in 2013. Still, Cherkizovo Group’s management is optimistic about the Group’s business prospects. Our diversified business structure, including not only pork and poultry but also grain production and meat processing, creates a solid platform that enables us to mitigate any negative market factors.”