OREANDA-NEWS. February 03, 2012. Cherkizovo Group  (LSE: CHE), one of Russia's leading integrated and diversified meat producers, issues a trading update ahead of its results for the year ended 31 December 2011, which will be reported in March 2012, reported the press-centre of Cherkizovo Group.

Poultry Division

Sales volumes in the Poultry division in 2011 increased by 34% to approximately 260,200 tonnes of slaughter weight compared to 194,100 tonnes in 2010, reflecting organic volumes added in the Bryansk and Penza clusters and the inclusion of sales by Mosselprom, acquired in May 2011. Prices in rouble terms increased by 1% from 71.89 roubles per kg in 2010 to 72.79 roubles per kg in 2011 (excluding VAT). Compared to the third quarter of 2011, the price in the fourth quarter stayed almost flat at 73.74 roubles per kg. Prices for poultry sales in dollar terms increased by 5% from USD 2.37 per kg in 2010 to USD 2.48 per kg in 2011 (excluding VAT). Compared to the third quarter of 2011, the price in the fourth quarter decreased 7% to USD 2.36 per kg.

Pork Division

Sales volumes in the Pork division in 2011 increased 4% to approximately 91,400 tonnes of live weight, compared to 87,650 tonnes in 2010. Prices in rouble terms increased by 11% from 71.95 roubles per kg in 2010 to 80.04 roubles per kg in 2011 (excluding VAT). Compared to the price in the third quarter of 2011 the price in the fourth quarter increased by 2% to 82.97 roubles per kg. In dollar terms, prices for pork sales increased by 15% from USD 2.37 per kg of live weight in 2010 to USD 2.72 per kg of live weight in 2011 (excluding VAT). Compared to the third quarter of 2011, the price in the fourth quarter decreased 5% to USD 2.66 per kg. 

Meat Processing Division

In 2011, consumption recovered to pre-crisis levels, and sales volumes in the Meat Processing segment increased by 3% to approximately 145,270 tonnes compared to 141,550 tonnes in 2010. Prices in rouble terms increased by 13% from 118.21 roubles in 2010 to 133.65 roubles per kg in 2011 (excluding VAT). Compared to the price in the third quarter, the price in the fourth quarter of 2011 increased by 6% to 142.74 roubles per kg. Prices in dollar terms increased by 17% from USD 3.89 per kg in 2010 to USD 4.55 per kg in 2011 (excluding VAT). Compared to the third quarter of 2011, the price in the fourth quarter decreased 2% to USD 4.57 per kg.

Commenting on the performance, Sergey Mikhailov, CEO of Cherkizovo Group said: "We delivered a 34% increase in sales volumes within our Poultry division in 2011 through a combination of organic growth, the contribution from Mosselprom, and the launch of additional facilities at our Bryansk and Penza clusters.

 The Pork division delivered growth in line with management's expectations as the segment recovered from the effects of the extreme weather conditions in 2010. In the course of the year we launched breeding facilities at our pork farms in Tambov, Voronezh and Lipetsk.

In the Meat Processing division we saw a steady increase in demand as consumption recovered in 2011. We are focused on improving the product mix in this segment. 

Pricing in the poultry division in 2011 has been relatively flat, while in the pork division pricing has increased as a result of demand rising more than expected due to its substitution from beef, where prices have been on a steep uptrend in 2011. 

Overall, management is optimistic that the Group will produce a strong financial performance for the full year in line with our expectations and will further continue to deliver against its strategy."