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Cherkizovo Welcomes Zero Tax on Agricultural Profits

10 October 2012, at 8:25am

RUSSIA - Russian President Vladimir Putin signed a federal law "On Amendments to the Tax Code of the Russian Federation and the Annulment of Certain Provisions of Legislative Acts of the Russian Federation," at the beginning of the month, setting zero tax rates for agricultural producers on profits in perpetuity.

"Our company appreciates the decision to extend the zero rate of income tax for agricultural producers” – said Sergei Mikhailov, Cherkizovo Group’s General Director.

“The reset of income tax will have a positive impact on our business and the industry as a whole, as it will allow manufacturers to increase long-term investment programs and increase competitiveness, which is critical since Russia joined the WTO. This decision will allow domestic agricultural companies to successfully implement new investment projects in the pork segment, where the payback period is higher."

Cherkizovo Group is implementing a number of large-scale investment projects in its Poultry and Pork Divisions.

In its Pork Division, Cherkizovo has completed the construction of modern production facilities in Lipetsk, Tambov and Voronezh regions. The commissioning of the new facilities will allow the production capacity of the Group to reach 180,000 tones of live weight per year.

In its Poultry Division, Cherkizoo Group is implementing projects to double the capacity of the Bryansk and Penza clusters.

The Group’s largest investment project is the construction of an agriculture facility in Elets (Lipetsk region), worth more than 20 billion rubles. The agro-industrial complex will include a hatchery for 240 million eggs a year, five broiler sites for 10 million birds with a slaughter and poultry processing capacity of 24 tons per hour, and a modern complex to produce fodder with a capacity of 90 tons per hour. After the commissioning of the Elets complex, the total production capacity of “Cherkizovo” Group’s Poultry segment will exceed 500,000 tones in live weight. It is planned that the complex will reach full capacity by 2015 and the construction of the feed mill is currently underway.

Cherkizovo Group (LSE:CHE) is the largest meat manufacturer in Russia, with 2011 revenues of circa $1.5 bn. It is also one of the top three companies serving Russia’s poultry, pork and meat processing markets. Due to its vertically integrated structure that includes grain storage facilities, fodder, livestock breeding, growing and slaughtering as well as meat processing and integrated distribution, Cherkizovo has consistently delivered sustainable revenue and profit growth. Cherkizovo’s strategy includes both organic growth and investment in new projects, driving the consolidation of the Russian meat market. Cherkizovo shares are quoted at LSE and RTS/MICEX.