Russian meat company Cherkizovo said today (28 March) that it expects a challenging 2011 despite recording an increase in net income for 2010.
The poultry and pork processor said that net income increased by 21%, or 16% on a rouble currency basis, to US$144.4m during the year to end 31 December.
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Revenue grew 17% to $1.19bn, or was up 12% on a rouble currency basis.
Cherkizovo said it expects a challenging year ahead as rising grain prices increase the company’s costs, with the processor anticipating that it won’t be able to fully offset these costs with higher pricing.
The processor said it will struggle to increase prices due to an “unusually weak pricing environment in the last quarter of 2010, despite commodity inflation”, which it attributed to a short-term oversupply of meat in the market due to destocking by “less efficient producers” and individual households.
The company added that it “welcomes” the government’s decision to decrease import quotas for 2011, which were cut by almost half in poultry against 2010 levels. Aside from the reduction, the new quota allows only for imports of leg quarters, which company CEO Sergey Mikhailov said: “considerably changes the market picture”.
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By GlobalDataHe added that he expects the industry to reach government- set self-sufficiency levels towards the end of the year, with imports accounting for some 10-12% of the market.
