Cherkizovo Group, Russia’s leading integrated meat producer, has released its H1 2014 figures, which show the company’s pork division regaining ground after a challenging H12013.
According to Sergei Mikhailov, Cherkizovo CEO, 1H 2013 was a challenging period with significant losses in the pork division due to expensive grain and a plunge in pork prices, and the Group was on the verge of losses. The H1 2014 figures show a return to normal profitability.
Milkhailov said: “The favourable market environment allowed us to compensate for the significant losses in the pork division we had last year due to expensive grain and a plunge in pork prices, and thus to get back to implementing the investment projects we had to freeze.”
In 1H14 the company invested RUB 2.8 billion (€57.59 mln) into CAPEX projects and also made a major investment and an important step toward poultry market leadership with the RUB 5 billion acquisition of Lisko Broiler. Lisko almost fully integrated into the production, logistics and sales infrastructure.
They also recently relaunched their core meat processing brand, changing its name to Cherkizovo. This was a well-timed action, as the situation on sausage market looks difficult due to very expensive raw meat. The company believes that the diversified business model will allow them to partially offset losses in meat processing with the profits from the livestock breeding divisions.
In his comments on the results Mikhailov aslo mentioning that although the Debt/EBITDA ratio has returned to a level that is comfortable for shareholders, they are seeing an increase in the cost of money and delays in interest reimbursement subsidies. These factors may negatively affect the Group’s business development.
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