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Cherkizovo's CEO is Confident of Strategy

by 5m Editor
2 August 2011, at 9:24am

RUSSIA - In its trading update for the first half of 2011, Cherkizovo reports sales volumes up in all categories, although the increase was marginal for the pork segment.

Sales volumes in the Poultry division in the first half of 2011 increased by a robust 18 per cent to approximately 117,990 tonnes of saleable weight compared to approximately 99,860 tonnes for the first half of 2010.

Prices for poultry sales in US dollar terms increased by nine per cent from US$2.30 per kilo in the first half of 2010 to $2.51 in the first half of 2011. (All prices quoted in this report exclude VAT). Compared to the first quarter of 2011, the price in the second quarter increased by seven per cent to $2.59 per kilo.

Prices in rouble terms increased almost by four per cent from 69.11 roubles (RUB) per kilo in the first half of 2010 to RUB71.79 in the first half of 2011. Compared to the first quarter of 2011, the price in the second quarter increased by two per cent from RUB71.07 to RUB72.39 per kilo.

Sales volumes in the Pork division in the first half of 2011 stayed almost flat at 41,070 tonnes of live weight, compared to 40,936 tonnes in the first half of 2010.

In dollar terms, prices for pork sales increased by 14 per cent from $2.36 per kilo of live weight in the first half of 2010 to $2.70 in the first half of 2011. Compared to the first quarter of 2011, the price in the second quarter increased by 10 per cent from $2.57 to $2.84 per kilo.

Prices in rouble terms increased by nine per cent from RUB71.09 per kilo in the first half of 2010 to RUB77.41 in the first half of 2011. Compared to the price in the first quarter of 2011 of RUB75.27 per kilo, the price in the second quarter increased by six per cent.

Sales volumes for the Meat Processing division increased by six per cent to 70,097 tonnes from 66,200 tonnes for the first half of 2010.

Prices in dollar terms increased by 17 per cent from $3.81 per kilo in the first half of 2010 to $4.47 in the first half of 2011. Compared to the first quarter of 2011, the price in the second quarter increased by eight per cent from $4.30 to $4.64 per kilo.

Prices in rouble terms increased by 12 per cent from RUB114.66 per kilo in the first half of 2010 to RUB127.98 in the first half of 2011. Compared to the price in the first quarter of RUB125.75 per kilo, the price in the second quarter of 2011 increased by three per cent.

Commenting on the performance, Sergei Mikhailov, CEO of Cherkizovo Group said: "In addition to delivering strong results across all segments in the first half of 2011, we have confirmed our status as the most active player on the Russian meat market through the acquisition of Mosselprom, one of Russia's best-known meat producers. Furthermore, we have started construction of the country's largest poultry production complex in the Lipetsk region.

"We are now in the process of integrating Mosselprom within the Group's production structure. Achieving synergies will help us to increase operational efficiency in our poultry segment, where we continue to deliver against our large-scale capacity increase projects. This spring, we opened two large poultry production facilities in our Bryansk and Penza clusters and we soon plan to launch two incubation facilities, which will be amongst the largest not just in Russia but across Europe.

"Our production results in the pork segment were affected by the extreme weather conditions that we witnessed last summer, however, now we see this segment begin to stabilise. We have also begun integrating our new asset, Orelselprom, which was acquired through the Mosselprom transaction.

"In the meat processing segment, we see a steady increase in demand for our meat products and we continue to work on increasing the efficiency and improving the resource base of this segment. In May, we announced the launch of the meat processing plant in Kaliningrad that we bought last year.

"Management is confident that the Group will continue to improve operating efficiency and deliver against its strategy," said Mr Mikhailov.