Cherkizovo Group announces operating results for the first half of 2016

July 28, 2016

Moscow, Russia – 28 July 2016 – Cherkizovo Group (LSE: CHE; MOEX: GCHE), the largest vertically integrated meat and feed producer in Russia, announces its operating results for the first half of 2016..

Key Operating Results

Sales volume by business segments

Divisions 1H 2016 1H 2015 Year-on-year
change (%)
Poultry 252 351 225 223 12%
Pork 86 902 77 271 12%
Meat Processing 102 898 81 755 26%
Grain Farming n/a n/a n/a

Poultry Division

Sales volume in the first half of 2016 increased by 12% year-on-year to 252,351 tons of sellable weight from 225,223 in the first half of 2015. This growth was driven by higher production levels, which resulted from improvements in efficiency, sales of excess inventory and the launch of new poultry houses at the Mosselprom production facility. The average price during the first half of 2016 dropped by 6% year-on-year to 90.06 RUB/kg1 due to oversupply in the market and consumers’ falling purchasing power. On a quarter-on-quarter basis, the average price grew by 3% to 91.61 RUB/kg.

1H 2016 1H 2015 Year-on-year
change (%)
2Q 2016 1Q. 2016 Quarter-on-quarter
change (%)
Volume, tons 252 351 225 223 12% 124 124 128 227 (3%)
Avg. price, RUB/kg 90,06 95,38 (6%) 91,61 88,62 3%

Pork Division

In the first half of 2016, sales volume in the pork division increased by 12% year-on-year to 86,902 tons of sellable weight. This was primarily due to anew genetics improvement strategy launched by the management at the beginning of the year to improve pigs’ health status and efficiency by increasing livability and weekly farrows. The average price decreased by 18% year-on-year to 83.20 RUB/kg, while on a quarter-on-quarter basis, it increased by 3% to 84.46 RUB/kg. The year-on-year drop was a result of Russian consumers’ lower purchasing power and an overall increase in pork production across the country, compounded by imports from Brazil.

1H2016 1H 2015 Year-on-year
change (%)
2Q 2016 1Q 2016 Quarter-on-quarter
change (%)
Volume, tons 86 902* 77 271* 12% 46 764 40 138 17%
Avg. price, RUB/kg 83,20 101,89 (18%) 84,46 81,73 3%

*Restated volume includes gilts

Meat Processing Division

During the reporting period, sales volume in the meat processing division grew by 26% year-on-year to 102,898 tons from 81,755 tons in 1H 2015. This increase resulted from the launch of a pig slaughter plant at the Dankov meat processing plant in the second half of 2015, which boosted both volume and product assortment. In the first half of 2016, the average price fell by 5% year-on-year to 164.42 RUB/kg due to non-sausage products from the Dankov meat processing plant having a greater share in sales. On a quarter-on-quarter basis, the average price fell by 1% to 163.81 RUB/kg.

1H 2016 1H 2015 Year-on-year
change (%)
2Q 2016 1Q 2016 Quarter-on-quarter
change (%)
Volume, tons 102 898 81 755 26% 54 283 48 615 12%
Avg. price, RUB/kg 164,42 172,93 (5%) 163,81 165,11 (1%)

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 the appropriate basis for comparison.

For more information please visit www.cherkizovo.com or contact

Cherkizovo Group

Dmitry Yakovlev
IR Manager
+7 (495) 660 2440 ext. 15962
d.yakovlev@cherkizovo.com

FTI Consulting

Anton Karpov 
+7 (495) 795 0623
anton.karpov@fticonsulting.com

 

About Cherkizovo Group

Cherkizovo Group is the largest meat and feed producer in Russia. The Group is a top-3 producer in the poultry, pork and processed meat markets and is the largest feed manufacturer in the country.

Cherkizovo Group encompasses 8 full cycle poultry production facilities, 15 modern pork production facilities, 6 meat processing plants, 9 feed mills and more than 140,000 hectares of agricultural land. In 2015, Cherkizovo Group produced more than 825,000 tons of meat products.

Thanks to its vertically integrated structure, which includes grain growing and storage, feed production, livestock breeding, fattening and slaughtering, and meat processing, alongside a distribution system, the Group has consistently delivered stable, long-term growth of both sales and revenue. The Company’s consolidated revenue reached RUB 77.0 bn in 2015.

Cherkizovo Group shares are traded on the London Stock Exchange (LSE) and on the Moscow Exchange (MOEX).

Cherkizovo Group shares are traded on the London Stock Exchange (LSE) and on the Moscow Exchange (MOEX).

 

1. Here and below, all average prices exclude VAT