OREANDA-NEWS. November 02, 2010.
Poultry Division
Total sales volumes in the poultry division for the first nine months of 2010 increased by 6% to 146,830 tonnes of slaughter weight compared to approximately 138,920 tonnes for the first nine months of 2009, reported the press-centre of Cherkizovo.  

Prices for Cherkizovo poultry sales increased by 3% in dollar terms from USD 2.27 per kg for the first nine months of 2009, to USD 2.33 per kg for the first nine months of 2010 (excluding VAT)*. Prices in rouble terms decreased by 4% from 73.88 roubles per kg for the first nine months of 2009 to 70.56 roubles per kg for the first nine months of 2010 (excluding VAT). The beginning of the fourth quarter saw an upward trend in prices for poultry sales, although increasing incoming poultry imports may affect domestic prices towards the end of this year and start of 2011. 

Pork Division
Sales volumes in the pork division increased by an impressive 51% to approximately 53,900 tonnes of live weight over the period, compared to approximately 35,570 tonnes for the first nine months of 2009. This growth reflected increased production as Cherkizovo’s new farms start to achieve their forecasted target levels of output. 

Prices increased by 4% in dollar terms from USD 2.32 per kg of live weight for the first nine months of 2009 to USD 2.41 per kg of live weight for the first nine months of 2010 (excluding VAT)*. In rouble terms prices decreased by 3% from an unusually high level of 75.38 roubles per kg for the first nine months of 2009 to 72.82 roubles per kg for the first nine months of 2010 (excluding VAT). During the remainder of the year we expect prices to remain mostly flat.

Meat Processing Division
In 2010, the Company has witnessed a recovery in demand for the division’s products, as sales volumes in the meat processing segment increased by 8% in the period to approximately 102,870 tonnes from approximately 95,370 tonnes for the first nine months of 2009. 

Prices in dollar terms increased by 10% from USD 3.47 for the first nine months of 2009 per kg to USD 3.82 per kg for the first nine months of 2010 (excluding VAT)*. Average prices in roubles increased by 2% from 112.74 roubles for the first nine months of 2009 to 115.52 roubles for the firstnine months of 2010 (excluding VAT). 

Commenting on the performance, Sergey Mikhailov, CEO of Cherkizovo Group said: 

“For the first nine months of 2010 Cherkizovo performed strongly across all segments, reflecting the increased demand for our products, primarily driven by lower imports and a consequent requirement for high quality domestically sourced meat. Accordingly, we expect to achieve targeted levels of production for 2010. 

So far this year, inflation for meat products in Russia has been relatively low compared to other products in the consumer food basket. At present the operating environment remains challenging, as a result of the worse than expected grain harvest and subsequent grain shortage. We are now witnessing a short-term effect of oversupply of meat in the market as less efficient producers and individual households are cutting down livestock, creating a temporary downward pressure on selling prices. However, in the medium term these actions will potentially lead to a shortage of supply and to more aggressive meat price inflation in 2011.”

*For price calculation in dollar terms the Company used the average exchange rate for the nine months of 2009 of 32.4814 roubles per 1 US dollar, for the nine months of 2010 the average rate was 30.2538 roubles per 1 US dollar.