Cherkizovo Group Announces Operating Results for 3Q and 9M 2017

October 26, 2017

Moscow, Russia – 26 October 2017 – Cherkizovo Group (LSE: CHE; MOEX: GCHE), the largest vertically integrated meat and feed producer in Russia, today announces operating results for the nine months ended 30 September 2017.

Key Operating Results

Sales volume by business segments

Divisions 9M 2017 9M 2016 Year-on-year
change (%)
Poultry 385,373 372,070 4%
Pork 148,722 131,581 13%
Meat Processing 167,346 158,647 5%

Poultry Division

Sales volumes during 9M 2017 increased by 4% y-o-y to 385,373 tonnes of sellable weight (9M 2016: 372,070), due to growth in production, as a result of improved operating performance. The average price during the reporting period increased by 1% y-o-y to 90.131 RUB/kg as a result of an increase in value-added products and brand name sales by 18% and HoReCa sales by 1%. On a quarterly basis, 3Q 2017 sales increased by 1% to 130,462 compared to 2Q 2017, due to growth in production. However, the average price during the corresponding period decreased by 2% to 88.14 RUB/kg.

9M 2017 9M 2016 Year-on-year
change (%)
3Q 2017 2Q. 2017 Quarter-on-quarter
change (%)
Volume, tons 385,373 372,070 4% 130,462 129,361 1%
Avg. price, RUB/kg 90,13 89,66 1% 88,14 89,93 (2%)

Pork Division

Sales volumes in 9M 2017 increased by 13% y-o-y to 148,722 tonnes (9M 2016: 131,581 tonnes). This was due to higher production levels following the launch of two new wean-to-finish sites in Voronezh in 2016, one in 2017 and two new wean-to-finish sites in Lipetsk this year, supported by the ongoing genetics improvement programme launched in 2014. The average price rose by 8% y-o-y to 93.74 RUB/kg (9M 2016: 86.59 RUB/kg). Average price growth during the period was attributable to the ongoing recovery in consumer purchasing power as well as promotional activity by large retailers. During 3Q 2017, sales volumes decreased by 6% to 50,353 tonnes compared to the previous quarter, due to exceptional growth in production volumes in the absence of free space at the sites. At the same time, the average sales price decreased by 4% q-o-q to 93.20 RUB/kg.

9M 2017 9M 2016 Year-on-year
change (%)
3Q 2017 2Q 2017 Quarter-on-quarter
change (%)
Volume, tons 148,722 131,581 13% 50,353 53,391 (6%)
Avg. price, RUB/kg 93,74 86,59 8% 93,20 97,22 (4%)

Meat Processing Division

Sales volumes increased by 5% y-o-y to 167,346 tonnes from 158,647 tonnes during 9M 2017. Growth was associated with a further increase in the share of sales of Cherkizovo Group products in the modern food retail format, in particular in the categories of sausage products and meat semi-finished products. During the reporting period, the average net price increased by 3% y-o-y to 150.19 RUB/kg resulting from an improvement in the product mix and an increase in the share of premium segment sales. On a q-o-q basis, sales volumes increased by 6% in the 3Q 2017 to 60,032 tonnes. Nevertheless, the average net price increased by 1% q-o-q to 150.34 RUB/kg due to a more balanced product mix.

9M 2017 9M 2016 Year-on-year
change (%)
3Q 2017 2Q 2017 Quarter-on-quarter
change (%)
Volume, tons 167,346 158,647 5% 60,032 56,835 6%
Avg. price, RUB/kg 150,19 145,16 3% 150,34 148,92 1%

Grain Farming Division

Due to the seasonality of this business, the 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