Rouble erodes Ros Agro profits in Q1 - Just Food
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Rouble erodes Ros Agro profits in Q1

31 May 2017

Russian mayonnaise, margarine and packaged sugar supplier Ros Agro has reported higher first-quarter sales but seen its profitability come under pressure amid the strengthening of the rouble.

Rouble erodes Ros Agro profits in Q1

Russian mayonnaise, margarine and packaged sugar supplier Ros Agro has reported higher first-quarter sales but seen its profitability come under pressure amid the strengthening of the rouble.

The company, the UK-listed holding business of the Rusagro Group, posted a 6% increase in sales to RUB18.78bn for the three months to the end of March.

Ros Agro said sales from its sugar, meat and agriculture divisions rose year-on-year. However, the group’s oil and fat arm saw its sales slide amid declining prices.

However, despite the rising group sales, Ros Agro booked a 36% fall in gross profit to RUB2.33bn and a 50% in adjusted EBITDA to RUB2.41bn.

It reported an operating loss of RUB656.4m and a net loss of RUB409.8m, which compared to an operating profit of RUB1.26bn and a net profit of RUB367.2m in the first quarter of 2016.

Maxim Basov, a member of the Ros Agro board and CEO of Rusagro, said: “In the first quarter of 2017 rouble was stronger than in the first quarter of 2016 by more than 28%. Stronger rouble decreases margins of all business units given large surpluses of sugar, grain and vegetable oil in Russia.

“Margins of processing businesses – sugar and oil and fat – were further hit as raw material was bought at the end of the year when [the] rouble was weaker and prices were higher. These businesses will operate with weak margins in strong rouble export-driven environment. Meat segment improved year-to-year on higher global meat prices and improved operations. Traditionally the first quarter is the weakest quarter in the year.”