Russian meat producer Cherkizovo Group has posted a 10.4% year-on-year growth in revenue to RUB 33.3 billion (€370 million) in the first quarter of its financial year.
The company’s gross profit increased 29.7% in the quarter, to RUB 11.0 billion (€120 million), from RUB 8.4 billion (€94 million) in the first quarter of 2020.
The gross profit margin improved to 32.9% from 28.0% in the same period last year.
Cherkizovo Group generated a net profit of RUB 6.5 billion (€72 million) in the first quarter, up from RUB 3.0 billion (€33 million) in the same period last year.
Adjusted EBITDA declined by 8.6% year-on-year to RUB 4.6 billion (€51 million), while adjusted EBITDA margin dropped 280 basis points to 13.7%.
Divisional Performance
Chicken sales volumes declined by 3.1% to 169.2 thousand tonnes in the first quarter of 2021, from 174.7 thousand tonnes in the same period last year.
The average selling price increased by 22% year-on-year to RUB126.0 per kilogram, driven by higher sales volumes of Chicken Kingdom branded products and recovery of sales in the foodservice segment.
The division’s adjusted EBITDA increased by 3.7% year-on-year to RUB 3.5 billion, while the adjusted EBITDA margin dropped to 16.2% from 18.4% a year ago.
The pork division saw external sales volumes decline by 33.4% year-on-year, to 31.9 thousand tonnes in the first quarter from 47.9 thousand tonnes in 2020.
The average selling price for live pork increased by 29% year-on-year to RUB 100.7 per kilogram, from RUB 78.3 kilogram a year ago.
The average selling prices for carcass increased by 24%, averaging at 150.7 RUB/kg, while average selling prices for cuts rising by 7% to 222.9 RUB/kg.
The segment’s adjusted EBITDA remained unchanged at RUB 2.2 billion, while the adjusted EBITDA margin stood at 29.1% compared to 30.9% in the first quarter of 2020.
Meat Processing Division
The RTE Meat Processing segment reported a 3.6% year-on-year growth in sales volumes to 26.3 thousand tonnes from 25.4 thousand tonnes last year, driven by expanded distribution of sausages under Cherkizovo and Cherkizovo Premium brands.
The average selling price increased by 5% year-on-year to RUB 199.8 per kilogram, from RUB 190.3 per kilogram.
The division’s adjusted EBITDA turned negative and amounted to RUB 0.4 billion compared to the positive result of RUB 0.1 billion in the first quarter of 2020.
Sergei Mikhailov, CEO of Cherkizovo, commented, “Despite the slightly decreased sales in volume terms, Cherkizovo Group posted growth in revenue and net profit in Q1 2021. These results came on the back of increased average sales price in all segments, which in turn is driven by continued expansion of value-added products sales.
“The company’s financial performance in Q1 was supported by the traffic recovery in the foodservice channel following the lifting of the pandemic related restrictions on visiting catering establishments and coupled with additional sales coming from the recently acquired asset in Efremovo, the Tula region.”
Outlook
In 2021, Cherkizovo Group expects foodservice sales to recover to pre-pandemic levels and expects this channel to be a potential revenue driver for the group.
The acquisition of Kompas Foods, a McDonald’s supplier, based in the Tula Region, and the launch of a beef burger production line in the Kaliningrad Region have made the company well-positioned to meet the higher demand for eating out, it added.
The company believes that the macroeconomic situation in Russia remains a concern for food market players with prices of items used in food production, such as plant-based oil, packaging, and mineral fertilisers, continuing to rise.
Higher costs are forcing manufacturers to adjust prices of end products, which may hurt consumer demand as many people continue to face low real incomes, the company noted.
The company also considers the increased cost of borrowing for businesses, following the Central Bank’s decision to raise the key rate, as another negative factor. However, it will not affect Cherkizovo’s current and planned investment projects across Russia, it added.
