Cherkizovo Group Announces Operating Results for the First Half of 2017

July 27, 2017

Moscow, Russia – 27 July 2017 – Cherkizovo Group (LSE: CHE; MOEX: GCHE), the largest vertically integrated meat and feed producer in Russia, today announces operating results for the first half of 2017.

Key Operating Results

Sales volume by business segments

Divisions 1H 2017 1H 2016 Year-on-year
change (%)
Poultry 254 911 252 351 1%
Pork 98 369 86 902 13%
Meat Processing 107 314 102 898 4%

Poultry Division

First half sales volumes increased by 1% year-on-year to 254,911 tonnes of sellable weight (1H 2016: 252,351). This modest uptick was due to growth in production, leading to increased output volumes. The average price during the first half of 2017 increased by 1% year-on-year to 91.151 RUB/kg as a result of an increase in brand name sales by 2% and HoReCa sales by 1% compared to the first half of 2016. The implementation of a new trade law limiting retroactive bonuses also had an impact on the first half average price. On a quarter-on-quarter basis, the average price decreased by 3% to 89.93 RUB/kg, due to the decrease in bonuses to retail chains, resulting in a negative impact on average prices.

1H 2017 1H 2016 Year-on-year
change (%)
2Q 2017 1Q. 2017 Quarter-on-quarter
change (%)
Volume, tons 254 911 252 351 1% 129 361 125 550 3%
Avg. price, RUB/kg 91,15 90,06 1% 89,93 92,40 (3%)

Pork Division

Production volumes in the first half of the year increased by 13% year-on-year to 98,369 tonnes (1H 2016: 86,902 tonnes). This was due to higher production levels following the launch of two new wean-to-finish sites in Voronezh in 2016, as well as the ongoing genetics improvement strategy launched in 2014. The average price rose by 13% year-on-year to 94.02 RUB/kg (1H 2016: 83.20 RUB/kg). This increase was driven by growing consumption in Russia, which has been fuelled by increased promotional activity by Russian retail chains, along with a stabilisation in the purchasing power of consumers.

1H 2017 1H 2016 Year-on-year
change (%)
2Q 2017 1Q. 2017 Quarter-on-quarter
change (%)
Volume, tons 98 369 86 902 13% 53 391 44 978 19%
Avg. price, RUB/kg 94,02 83,20 13% 97,22 90,23 8%

Meat Processing Division

Sales volumes increased by 4% year-on-year to 107,314 tonnes from 102,898 tonnes in the first half of 2016. This was due to the growth in product assortment in the modern retail channel and geographical diversification to the Ural and North West regions. During the reporting period, the average price fell by 7% year-on-year to 153.65 RUB/kg as a result of the new trade law limiting retroactive bonuses. The decrease in bonuses to retail chains had a negative effect on prices.

1H 2017 1H 2016 Year-on-year
change (%)
2Q 2017 1Q. 2017 Quarter-on-quarter
change (%)
Volume, tons 107 314 102 898 4% 56 835 50 479 13%
Avg. price, RUB/kg 153,65 164,42 (7%) 152,51 154,94 (2%)

Grain Farming Division

Due to the seasonality of this business, results of this segment are reported annually to better reflect the business performance and provide an appropriate basis for comparison.

 

1. Here and below, all average prices exclude VAT