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Cherkizovo's Q1 Result Hit by Seasonal Factors

by 5m Editor
15 May 2009, at 8:48am

RUSSIA - Cherkizovo OJSC, one of Russia's leading integrated and diversified meat producers, has issued its trading results for the first quarter (Q1) of 2009. Performance varied across the company's Poultry, Pork and Meat Processing divisions, influenced by seasonal factors.

Poultry division

Total sales volumes in the poultry segment in the first quarter of 2009 gained six per cent to 41,500 tonnes compared to approximately 44,100 tonnes in the first quarter of 2008.

Prices for Cherkizovo poultry sales increased by 15 per cent from 62.83 rubles (RUB) per kilo in the first quarter of 2008 to RUB 72.05 in the same period of 2009 (excluding VAT). Due to the 40 per cent devaluation of the ruble and related foreign exchange effect, prices in dollar terms decreased by 18 per cent from $2.59 per kilo in the first quarter of 2008 to $2.12 in the same period of 2009 (excluding VAT).

Pork division

Sales volumes in the pork division in the first quarter of 2009 remain flat at approximately 10,000 tonnes. As capacity at the new pork farms in Lipetsk and Tambov comes on line, the company expects production to reach targeted levels.

In the first quarter, prices for pork in Russia were strong and increased in ruble terms by 30 per cent from RUB 57.26 per kilo in the first quarter of 2008 to RUB 74.61 rubles in the same period of 2009 (excluding VAT). In dollar terms, prices decreased by seven per cent from $2.36 per kilo of live weight in the first quarter of 2008 to $2.20 of live weight in the same period of 2009 (excluding VAT).

Meat Processing division

In the meat processing division, the company continued to decrease volumes of lower-priced, lower-margin products, and this together with lower consumption in the regions of Russia due to tough economic conditions affected the performance of the division. Sales volumes were lower, down 16 per cent to approximately 28,400 tonnes in the first quarter of 2009 from approximately 34,000 tonnes in the first quarter of 2008.

Average prices increased by 21 per cent from RUB 92.56 in the first quarter of 2008 to RUB 111.57 in the first quarter of 2009 (excluding VAT). Segment prices in dollar terms decreased by 14 per cent from $3.82 in the first quarter of 2008 to $3.29 in the same period of 2009 (excluding VAT).

CEO's comment

Commenting on the performance, Sergei Mikhailov, CEO of Cherkizovo Group said: "Our sales in the first quarter were primarily influenced by seasonal factors as well as the Lent period ahead of Easter in Russia. However, despite the challenging economic conditions, we remain cautiously optimistic about consumption patterns and pricing trends for our products."