Russian meat producer Cherkizovo Group reported growth in revenue and gross profit in the first quarter as its export sales increased by 3.5 times year-on-year to $35 million (€32.1 million).
The company posted a 13.1% year-on-year growth in revenue to RUB30.2 billion (€390 million) in this period, while gross profit was up 22.5% to RUB8.8 billion (€110 million).
Adjusted EBITDA increased by 23.9% to RUB5.0 billion (€64 million), while adjusted EBITDA margin rose to 16.6%, from 15.1% in the same period last year.
However, the Group’s net profit declined by 6.1% year-on-year to RUB 3.0 billion (€38 million).
The adjusted net profit for the financial quarter amounted to RUB1.3 billion (€17 million), down 36.6%.
Sergei Mikhailov, CEO of Cherkizovo, commented, “In the first quarter of the year our business delivered higher revenues and profits as volumes rose and we continued to execute tight cost control.”
Divisional Performance
The company’s poultry division saw a 5.2% growth in sales volume to 174,700 tonnes compared to the same period last year.
The sales of products under Chicken Kingdom brand grew 10%, while Petelinka products reported flat sales in this period.
Gross profit of the division doubled year-on-year and amounted to RUB 5.2 billion, driven by growth in volumes, sales channel diversification, and productivity gains.
Sales volumes in the pork division increased by 12.7% to 74,300 tonnes.
Its gross profit dropped 47.7% to RUB 1.8 billion (€23 million) from RUB 3.5 billion (€45 million) in the first quarter of 2019.
The company attributed this decline to a combination of lower pork prices and smaller net change in fair value of biological products, partially offset by lower cost of production.
In the meat processing division, sales volumes increased by 14.6% year-on-year to 61,400 tonnes, driven by demand for sausages.
Mikhailov added, “In our chicken business, we expanded sales of one of our core brands - Chicken Kingdom - by 10%, and significantly boosted our export sales, predominantly to China.
"Pork overproduction domestically continued, and prices for this protein remained under pressure in the absence of available export markets. However, our meat processing operations benefited from the lower cost of pork.”
Outlook
The company recognised the depreciation of the Ruble and declining consumer disposable income due to the COVID-19 pandemic as two main concerns for the company.
The company will approach the ongoing public health and economic crisis with seriousness and caution.
However, it will also continue to pursue opportunities to grow its market share through investment in capacity expansion and modernisation as well as selective acquisitions.
Mikhailov said that the company is aware of its role in maintaining food security in the country and ensuring the steady supply of quality meat products for customers.
“We are taking all necessary steps to safeguard the security of our employees across our supply chain from farm to retail,” he added.
© 2020 European Supermarket Magazine – your source for the latest retail news. Article by Dayeeta Das. Click subscribe to sign up to ESM: The European Supermarket Magazine.
