CHE14 Sep 2011 09:42
Sergey Mikhailov, Chief Executive Officer of Cherkizovo Group, said:
"Despite the challenging operating environment at the beginning of this year, we have delivered a strong set of results across all segments in the first half of 2011, significantly improving our performance in the second quarter driven by an improving pricing environment, rising demand and continued cost efficiencies. Accordingly, we showed Group revenues of $689.1 million, adjusted EBITDA of $105.7 million and a robust adjusted EBITDA margin of 15%. Moreover, we have confirmed our status as the most active player on the Russian meat market through the acquisition of Mosselprom, one of Russia's best known poultry producers. Furthermore, we have started construction of the country's largest poultry production complex in the Lipetsk region.
We are now in the process of integrating Mosselprom within the Group's production structure. Achieving synergies will help us to increase operational efficiency in our poultry segment, where we continue to deliver against our large scale capacity increase projects. Already this year we opened two large poultry production facilities in our Bryansk and Penza clusters and an incubation site in Bryansk, while we plan to launch a processing facility and another incubation facility in Penza which will be amongst the largest not just in Russia, but across Europe.
Our production results in the pork segment were affected by the extreme weather conditions that we witnessed last summer, however now we see this segment begin to stabilise. We have also begun integrating our new asset "Orelselprom", which was acquired through the Mosselprom transaction.
In the meat processing segment we see a steady increase in demand for our meat products and we continue to work on increasing the efficiency and improving the resource base of this segment. In May we announced the launch of the meat processing plant in Kaliningrad that we bought last year.
We also welcome the Government's recent decision to offer direct subsidies to offset sharp cost increases, and allow domestic producers to continue developing quality local products, despite the difficult trading conditions. Moreover, the current grain harvest is turning out to be favourable for Russia, which, we expect, is set to further stabilise input costs.
Overall, we expect that in the second half of the year we will return to normalised profitability levels, which we already demonstrated in the second quarter, and this will offset the negative impact of the performance in the first quarter. Accordingly, management is optimistic that we are on track to meet expectations for the full year."
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