Russian meat processor Cherkizovo said today (28 August) it has returned to “normal profitability” in the first half of the year amid more favourable market conditions.
A spike in grain costs and a fall in pork prices hit Cherkizovo’s results in the first half of 2013. However, the London-listed group today reported a recovery in profits and higher sales for the first six months of this year.
Cherkizovo’s net income stood at US$115.2m, compared to $9m a year earlier. In the first half of 2012, it generated $95.5m.
The company’s operating income reached $130.8m in the first half of 2014, against $25.1m a year ago. In 2012, Cherkizovo’s operating income stood at $109.3m.
Sales rose 12% to $872.3m in the first half of 2014 thanks to a mix of higher selling prices across its business and an increase in pork and poultry volumes.
CEO Sergei Mikhailov said: “After a very challenging 1H 2013, when the group was on the verge of losses, Cherkizovo returned to its normal profitability figures in 1H14. The favorable market environment allowed us to compensate for the significant losses in the pork division we had last year due to expensive grain and a plunge in pork prices, and thus to get back to implementing the investment projects we had to freeze.”
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However, Mikhailov had a note of caution. “It is also worth mentioning that although the debt/EBITDA ratio has returned to a level that is comfortable for shareholders, we are seeing an increase in the cost of money and delays in interest reimbursement subsidies. These factors may negatively affect the group’s business development.”