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Strong First Quarter for Cherkizovo

by 5m Editor
6 May 2010, at 9:10am

RUSSIA - Russian integrated meat processor, Cherkizovo OJSC, saw a strong financial performance in the first quarter of this year.

Total sales volumes in the poultry division in the quarter increased by six per cent to 46,570 tonnes of slaughter weight compared to 44,100 tonnes in the first quarter of 2009.

Prices for Cherkizovo poultry sales increased by nine per cent in US dollar terms from $2.12 per kg in the first quarter of 2009 to $2.32 per kg in the first quarter of 2010 (excluding VAT).

Prices in rouble terms fell by four per cent from 72.05 roubles (RUB) per kg in the first quarter of 2009 to RUB69.20 in the first quarter of 2010 (excluding VAT).

In the fourth quarter of 2009, producers stocked up higher inventories of poultry due to an increased share of imports in the second half of the year, which affected the prices in the first quarter of 2010. In addition, prices were influenced by a seasonal effect evident in the first quarter of every year, as well as the early lent period ahead of Easter in Russia.

Sales in the pork division rose by a record 79 per cent to 17,505 tonnes live weight, compared to approximately 9,780 tonnes in the first quarter of 2009, as production at new farms is now reaching targeted levels.

Prices increased by six per cent in dollar terms from $2.20 per kg of live weight in the first quarter of 2009 to $2.33. In rouble terms, prices fell by seven per cent from what the company descibed as an exceptionally high level of RUB74.61 per kg in the first quarter of 2009 to RUB69.58 in the first quarter of 2010 (excluding VAT).

In the first quarter of 2010, prices were affected by factors of seasonality as well as by the unusually high import of live pigs in Russia in the last quarter of 2009, Cherkizovo said.

The Company saw a strong recovery and pick-up of demand for the meat processing division’s products, as sales volumes in the meat processing segment increased by nine per cent to approximately 30,800 tonnes from 28,400 tonnes in the first quarter of 2009.

Prices in dollar terms rose by 16 per cent from $3.29 per kg in the first quarter of 2009 to $3.80 in the first quarter of 2010 (excluding VAT). Average prices in roubles rose by two per cent from RUB111.56 roubles in the first quarter of 2009 to RUB113.71 in the first quarter of 2010 (excluding VAT).

Sergey Mikhailov, CEO of Cherkizovo Group said: “In the first quarter of 2010, we saw strong performance across all our segments, reflecting increased demand for our products.

"In the poultry division, we have started to see returns from the large-scale capacity increase projects we commenced last year. In line with our expectations, our pork division has achieved impressive growth reflecting the completion of the investment cycle and the division now being in a volume growth phase.

"In our meat processing division, for the first time in recent years, we saw a significant recovery in volumes as demand for meat products started to improve.

"Poultry pricing reduced in the first quarter of the year due to higher inventory stocking by producers in the fourth quarter of 2009. This was caused by an increased share of imports in the second half of the year.

"The first quarter of the year is traditionally weak, affected by tighter consumer spending after the lengthy New Year holiday period and an early lent in Russia.

"However, towards the end of the quarter, we saw a recovery in poultry and pork prices, and this trend is continuing in the second quarter."

Mr Mikhailov added: "Throughout the year, we anticipate further volume growth across our pork and poultry divisions, as our new pork operations accelerate output, and we start increasing poultry volumes at our Bryansk poultry cluster towards the end of the year.

"In meat processing, we expect the positive trend to continue and we anticipate a return to pre-crisis levels. Overall, the Group broadly expects the pricing environment for our products to remain positive driven by a decrease in imports and growing domestic demand.

"The management is confident that the Group will continue to focus on providing efficiency increases and delivering against our strategy."