Russia meat producer Cherkizovo has booked an increase in full-year sales volumes in two of its divisions.
In the 12 months to the end of December, sales volumes in its poultry unit climbed 23% to around 319,210 tonnes of slaughter weight. The increase reflects organic volumes added in the Penza and Bryansk clusters and sales by Mosselprom, which was acquired in May 2011.
Sales volumes in the firm's pork division were up 14% to around 103,877 tonnes of live weight.
Cherkizovo's meat processing division, however, recorded a volume decline of 12% to around 127,403 tonnes due to the closure of an "inefficient" slaughtering facility in southern Russia.
Moscow, Russia - January 31, 2013 - Cherkizovo OJSC (LSE: CHE), Russia's leading integrated and diversified meat producer, today issues a trading update for the year ended 31 December 2012.
Poultry Division
Sales volumes in the Poultry division in 2012 increased by 23% to approximately 319,210 tonnes of slaughter weight compared to 260,200 tonnes in 2011, reflecting organic volumes added in the Penza and Bryansk clusters and sales by Mosselprom, which was acquired in May 2011 and now is fully integrated.
Prices in rouble terms increased by 8% from 72.79 RUR/kg in 2011 to 78.62 RUR/kg in 2012 (excluding VAT). Compared to the third quarter of 2012, the price in the fourth quarter increased by 3% to 84.81 RUR/kg.
Prices for poultry sales in dollar terms increased by 2% from $2.48/kg in 2011 to $2.53/kg in 2012 (excluding VAT)*. Compared to the third quarter of 2012, the price in the fourth quarter increased by 6% to $2.73/kg.
Pork Division
Sales volumes in the Pork division in 2012 increased by 14% to approximately 103,877 tonnes of live weight, compared to 91,400 tonnes in 2011.
Prices in rouble terms decreased by 4% from 80.04 RUR/kg in 2011 to 76.52 RUR/kg in 2012 (excluding VAT). Compared to the price in the third quarter of 2012, the price in the fourth quarter sharply decreased by 21% to 65.44 RUR/kg, reflecting an increased supply of live hogs to the market, and the influence of seasonal factors.
In dollar terms, prices for pork sales decreased by 10% from $2.72/kg of live weight in 2011 to $2.46/kg of live weight in 2012 (excluding VAT)*. Compared to the third quarter of 2012, the price in the fourth quarter decreased by 19% to $2.11/kg.
Meat Processing Division
Sales volumes in the Meat Processing division decreased by 12% to approximately 127,403 tonnes compared to 145,270 tonnes in 2011, due to the closure of an inefficient slaughtering facility in southern Russia.
Prices in rouble terms increased by 11% from 133.65 RUR/kg in 2011 to 148.39 RUR/kg in 2012 (excluding VAT), reflecting a change in the product mix towards higher margin processed products. Compared to the price in the third quarter, the price in the fourth quarter of 2012 increased by 2% to 153.76 RUR/kg.
Prices in dollar terms increased by 5% from $4.55/kg in 2011 to $4.77/kg in 2012 (excluding VAT)*. Compared to the third quarter of 2012, the price in the fourth quarter increased 5% to $4.95/kg.
Grain division
In 2012, Cherkizovo Group's Grain division became a strong contributor to the results for the first time. Cherkizovo Group's Grain division has reported a 2012 crop harvest of approximately 115,000 tonnes of agricultural products. The approximate current yields per hectare are: wheat: 3.4 tonnes; barley: 3.3 tonnes; sunflower: 2.6 tonnes; and corn: 6.1 tonnes.
Sales in the Grain division in 2012 amounted to 112,414 tonnes of agricultural products, including 51,254 tonnes of wheat, 24,594 tonnes of barley, 11,990 tonnes of corn, 12,000 tonnes of sunflower.
Average prices in the Grain division in 2012 were approximately 8.28 thousand RUR/tonne ($266/tonne), price for wheat amounted to 7.12 thousand RUR/tonne ($229/tonne), price for barley amounted to 6.07 thousand RUR/tonne ($195/tonne), price for corn amounted to 7.36 thousand RUR/tonne ($237/tonne), price for sunflower amounted to 18.09 thousand RUR/tonne ($582/tonne).
*For price calculation in dollar terms the Company used the average exchange rate for 2012 of 31.093 RUR/USD, for 2011 the rate was 29.3874 RUR/USD. In the fourth quarter of 2012 the average rate was 31.0767 RUR/USD.
About Cherkizovo Group
Cherkizovo Group (LSE:CHE) is the largest meat manufacturer in Russia and one of the top three companies serving Russia's poultry, pork and meat processing markets. The company is also Russia's largest producer of fodder.
The Group includes 7 full cycle poultry production facilities, with a total capacity of 400,000 tonnes live weight p.a.; 14 modern pork production facilities with a total capacity of 180,000 tonnes live weight p.a.; 6 meat processing plants with a total capacity of 190,000 tons p.a.; 6 fodder plants with a total capacity of 1.4 million tonnes p.a.; grain storage facilities with a total storage capacity exceeding 500,000 tonnes; and a land bank exceeding 100,000 hectares. In 2012, Cherkizovo produced more than half a million tonnes of meat and processed meat products.
Due to its vertically integrated structure, which includes agricultural land, grain storage facilities, feed production, livestock breeding, growing and slaughtering as well as meat processing and integrated distribution, Cherkizovo has consistently delivered sustainable revenue and profit growth. In 2011, Cherkizovo's US GAAP consolidated revenue increased 24% to $1,473 million, and net profit amounted to $135.9 million.
Within the last five years alone, Cherkizovo has invested more than $1 billion into the development of Russia's agriculture sector. In addition to existing production facilities, the Group is also investing in a 20 billion rouble hi-technology agro-industrial production complex in Elets, Lipetsk region.
Cherkizovo's strategy includes both organic growth and investment in new projects, driving the consolidation of the Russian meat market. Cherkizovo shares are quoted on LSE and RTS/MICE?
