OREANDA-NEWS. March 19, 2012. Cherkizovo Group (LSE: CHE), one of Russia’s leading integrated and diversified meat producers, announces full-year audited financial results for the period ended 31 December 2011, reported the press-centre of Cherkizovo Group.  

Highlights
Revenues increased 24% to USD 1,472.9 million in 2011 from USD 1,188.2 million for 2010, and increased 20% on a rouble currency basis. Revenues increased 22% to USD 392.5 million in the fourth quarter of 2011 from USD 320.5 million for the fourth quarter of 2010, and increased 25% on a rouble currency basis for the same period.

Adjusted EBITDA increased 12% to USD 245.5 million from USD 218.5 million for 2010, and increased 9% on a rouble currency basis. Adjusted EBITDA in the fourth quarter of 2011 increased 30% to USD 65.5 million from USD 50.3 million in the fourth quarter of 2010, and increased 33% on a rouble currency basis.

Adjusted EBITDA margin was 17% in 2011, down from 18% for 2010. Adjusted EBITDA margin in the fourth quarter of 2011 increased to 17%.

Gross profit increased 14% to USD 369.3 million from USD 323.8 million for 2010, and increased 10% on a rouble currency basis. Gross profit in the fourth quarter increased 23% to USD 98.8 million from USD 80.5 million in the fourth quarter of 2010, and increased 25% on a rouble currency basis.

Group gross margin was 25% for 2011 and 25% for the fourth quarter.

Net income increased 2% to USD 147.8 million from USD 144.4 million for 2010, and decreased by 1% on a rouble currency basis. Net income in the fourth quarter increased 13% to USD 39.3 million from USD 34.6 million, and increased 15% on a rouble currency basis.

As of 31 December 2011 Net debt was USD 719.2 million.

The effective cost of debt decreased to 2.0% from 2.5% for 2010.

Net income per share increased 2% to USD 3.44.

Cash conversion rate (CCR)*** was 157% (115% for 2010) which shows an excellent quality of earnings

Business Developments
Cherkizovo has acquired 100% of Mosselprom - a diversified vertically-integrated agro-industrial group. Mosselprom’s production activities include poultry, pork, feed production and grain businesses.

Cherkizovo has started construction of the Elets agroindustrial complex in the Lipetsk region, which is a unique integrated poultry production facility where production is set to start in 2014.

Cherkizovo has built a state-of-the-art production line for smoked sausages at the “Otechestvenniy Product” meat processing plant. The renovated plant has a monthly production capacity of 400 tonnes.

Cherkizovo has opened a poultry breeding facility, “Komarovka”, at its Penza cluster. The facility consists of 34 bird houses, with a combined capacity of almost 1.1 million broilers.

Cherkizovo has opened a second line at the poultry breeding facility in its Bryansk cluster. It consists of 26 bird houses, with a combined capacity of almost 880,000 broilers.

Cherkizovo has launched the largest hatchery in Russia at its Penza cluster. A modern high technology complex, built as part of Cherkizovo’s capacity increase project at the Penza poultry cluster, enables 105 million eggs to be incubated per year.

Cherkizovo has launched a large hatchery in Bryansk, which enables 43 million eggs to be incubated per year. After the launch of a second new line, the total annual capacity of the hatchery will be 66 million eggs.

Cherkizovo has started production at its greenfield pork farms in Tambov, Voronezh and Lipetsk by launching three breeding facilities.

Cherkizovo has opened a state-of-the-art slaughtering facility with an hourly capacity of 8,000 heads at its Penza cluster.

Sergey Mikhailov, Chief Executive Officer of Cherkizovo Group, said:
“We are pleased to report a solid performance across all segments in 2011, in line with our targets. The Group achieved a 24% increase in revenue and growth in Adjusted EBITDA of 12%, to deliver a healthy 17% Adjusted EBITDA margin.

These results have been achieved despite a very challenging operating environment at the start of the year, where extreme weather conditions had resulted in lost harvests and a steep increase in grain prices. The Company benefited from important and timely government measures in 2011 to support poultry and pork producers through subsidies and action in the grain market.

We have confirmed our status as the most active operator in the Russian meat sector through the acquisition and integration of Mosselprom, one of Russia’s best known poultry producers. We have also started construction of the country’s largest poultry production complex in Elets in the Lipetsk region. In addition to opening two large poultry production facilities in our Bryansk and Penza clusters, we have also launched two incubation facilities, which are amongst the largest not just in Russia, but across Europe.

Our results in the pork segment demonstrate that we have successfully overcome the adverse consequences of last year’s weather conditions, and are now witnessing production growth. In the course of the year, we have launched three breeding facilities at our greenfield pork farms in Tambov, Voronezh and Lipetsk. We have also integrated our new asset “Orelselprom”, which was acquired through the Mosselprom transaction.

In the meat processing segment we have built upon the 2010 purchase of the “Otechestvenniy Product” meat-processing plant in the Kaliningrad region, to take further steps towards increased efficiency and extending the division’s resource base. During the year, we built a state-of-the-art production line for smoked sausages at the plant.

In terms of outlook, there are many uncertainties in the current operating environment. However, despite the challenges noted, management is confident that the Group is taking the appropriate measures in terms of investing for growth and efficiency to deliver performance in line with its strategic expectation in 2012.”