|By Marketwired .||
|March 6, 2014 03:40 AM EST||
MOSCOW, RUSSIA -- (Marketwired) -- 03/06/14 --
6 March 2014 Cherkizovo Group OJSC ("Cherkizovo" or "the Group" or "the Company") Financial results for the Year Ending December 31, 2013 Moscow, March 6, 2014 - Cherkizovo Group (LSE: CHE), Russia's largest integrated and diversified meat producer, today announces full-year audited financial results for the period ending 31 December 2013. Financial Highlights * Revenues increased by 8% in roubles, and increased by 5% on a US Dollar basis to $1,654.9 million in 2013 from $1,570.3 million in 2012. Revenues increased by 6% to $460.0 million in the fourth quarter of 2013 from $433.0 million for the fourth quarter of 2012, and increased by 11% on a rouble currency basis. * EBITDA* decreased by 41% in roubles, and declined by 43% on a US Dollar basis to $180.6 million in 2013 from $314.6 million in 2012. EBITDA* in the fourth quarter of 2013 decreased by 14% to $65.1 million from $75.4 million in the fourth quarter of 2012, and decreased by 10% on a rouble currency basis. * EBITDA* margin was at 11% in 2013, down from 20% in 2012. EBITDA* margin in the fourth quarter of 2013 decreased to 14% from 17% in 2012. * Gross profit decreased by 19% in roubles, and decreased by 21% on a US Dollar basis to $358.4 million in 2013 from $452.8 million for 2012. Gross profit in the fourth quarter of 2013 decreased by 1% to $118.2 million from $119.3 million in the fourth quarter of 2012, and increased by 4% on a rouble currency basis. * Group gross margin was at 22% in 2013 and 26% for the fourth quarter. * Net income decreased by 70% in roubles and declined by 71% on a US Dollar basis to $64.5 million from $225.2 million in 2012. Net income in the fourth quarter of 2013 decreased by 38% to $41.4 million from $ 66.5 million in fourth quarter of 2012, and declined by 35% on a rouble currency basis. * As of 31 December 2013 Net debt** was RUR 24,746.5 million ($756.1 million). * The effective cost of debt increased to 3% from 2% for 2012 * Net income per share decreased by 72% to $1.47 * Cash conversion rate (CCR)*** was 277%(103% for 2012) Business Developments * Large scale projects aimed to double capacity at the Bryansk and Penza clusters were completed. As a result of these 7.5 billion RUR investments, Bryansk cluster capacity increased from 35 000 to 85 000 tonnes p.a., Penza cluster capacity increased from 60 000 to 125 000 tonnes p.a. (liveweight) * Construction is underway of new broiler farms in the Moscow and Lipetsk regions. These farms will become operational in 2014 * Construction is underway of feed plant in the Bryansk region, hatchery for 240 million eggs p.a. and grain storage facility of 215 000 tonnes in the Lipetsk region * Petelinka brand recognized as "The Product of the Year"; new marketing campaigns and branding initiatives helped to increase the share of branded poultry products in sales * All new pork complexes are fully stocked with sows and fully operational. The company had increased number of piglets born by 500 000 with the same number of sows as in 2012 * Cherkizovo became Russia's second largest pork producer, increasing its sales of live hogs by 50% * The company installed a new semi-cooked products line"Cherkizovo Express" worth $20 million on its Moscow CHMPZ plant * The company reconstructed the slaughtering facility at Penza plant, increasing its meat storage capacity threefold and its livestock storing capacity twofold. * Cherkizovo acquired Dankov meat processing plant and slaughter house in the Lipetsk region * 2013 grain harvest increased by 50% as compared to 2012; the Company demonstrated very strong yields. Commenting on the financial performance, Cherkizovo Group CEO Sergei Mikhailov said: The year 2013 was challenging for the entire Russian meat industry, including Cherkizovo Group. In the first half of the year, the pricing environment for the pork and grain markets was unfavourable. Live pigs prices reached record lows, while in contrast, prices on grain reached a historic high for the last decade. Under these conditions, even the most efficient manufacturers, such as our company, experienced constant losses. However, starting from the second quarter, the situation began to improve. The first and most important event was the grain price drop to the level of longstanding trends. Due to the decrease of imports and to production at private farms, the pork supply declined, and by the middle of the third quarter, pig prices returned to acceptable figures. In addition, the government allocated one-time compensatory subsidies to producers, and this partly mitigated the consequences of the price shock. During this difficult period, Cherkizovo Group once again demonstrated that its business model, which combines vertical integration and diversification, enables the company to operate confidently, even in the most unfavourable conditions. Cherkizovo Group's revenues rose, surpassing 50 billion roubles for the first time in the company's history, and we increased production and sales in all divisions. In 2013, the company produced approximately 640,000 tonnes of meat products and around 1.5 million tonnes of feed, confirming its status as the country's largest meat and fodder manufacturer. Despite the fact that profitability indexes dropped substantially due to the unfavourable market environment, we are satisfied with the results of the work done in 2013. In the poultry division, we completed projects to double production capacity in Penza and Bryansk poultry clusters, achieving the specified capacity of 450,000 tonnes live weight per year. The company focused on marketing and sales in order to achieve sufficient profitability on the stagnating market. We increased the share of our branded products by 7 percentage points, to almost 60 per cent, and Petelinka, our top brand, was recognized as The Product of the Year. The previously implemented investment program in pig production enabled Cherkizovo Group to sharply expand production and performance and to become, based on the year's results, Russia's second largest pork producer. We increased sales by more than 50 per cent. Obviously, the low pork prices in the first half of the year did not make it possible to obtain in 2013 a full financial yield from growth in pig production, but after prices recover, we expect that this division will again become one of the most profitable business sectors. Meat processing emerged as a stabilising factor for the business. The price decline on meat, which hurt pig production, helped the meat processing division to increase its profitability to double digits. The higher profitability was also supported by improvement in sales structure and an increase in the share of high-margin products. During the year we reconstructed the Moscow and Penza facilities, raising their operating efficiency and preparing for the release of new lines of ready-to-cook products. The grain division returned outstanding results. Compared to 2012, yield was up by 50 per cent from practically the same cultivated area. Moreover, the grain yield at Cherkizovo Group facilities substantially exceeds the countrywide average. In order to make the grain division even more efficient, we are continuing to invest in modern agricultural machinery and grain storage. Cherkizovo Group has entered 2014 with facilities that are operating at full capacity, and this will make it possible to produce and sell considerable volumes of meat products this year, while the favourable pricing environment that we are currently observing on the markets will help to regain our business profitability longstanding trend. *** About Cherkizovo Group Cherkizovo Group (LSE: CHE) is the largest meat manufacturer in Russia and one of the top three companies serving Russia's poultry, pork and meat processing markets. The company is also Russia's largest producer of fodder. The Group includes 7 full cycle poultry production facilities, with a total capacity of 450,000 tonnes live weight p.a.; 14 modern pork production facilities with a total capacity of 180,000 tonnes live weight p.a.; 6 meat processing plants with a total capacity of 158,000 tonnes p.a.; 6 fodder plants with a total capacity of 1.4 million tonnes p.a.; grain storage facilities with a total storage capacity exceeding 500,000 tonnes; and a land bank exceeding 100,000 hectares. In 2013, Cherkizovo produced more than half a million tonnes of meat and processed meat products. Due to its vertically integrated structure, which includes agricultural land, grain storage facilities, feed production, livestock breeding, growing and slaughtering as well as meat processing and integrated distribution, Cherkizovo has consistently delivered sustainable revenue and profit growth. In 2013, Cherkizovo's US GAAP consolidated revenue exceeded $1,6 billion. Cherkizovo's strategy includes both organic growth and investment in new projects, driving the consolidation of the Russian meat market. Within the last five years alone, Cherkizovo has invested more than $1 billion into the development of Russia's agriculture sector. Cherkizovo shares are quoted on LSE and MICEX. - Ends - For further information: Investors/Analysts/Media Alexander Kostikov Tel. +7 495 788 3232 ext. 15019 Head of Communications [email protected] Tatyana Elizarova Tel. +7 495 788 3232 ext. 15236 Senior IR Manager [email protected] *** Some of the information in this press release may contain projections or other forward-looking statements regarding future events or the future financial performance of the Group. You can identify forward looking statements by terms such as "expect,""believe,""anticipate,""estimate,""intend,""will,""could,""may" or "might" the negative of such terms or other similar expressions. We wish to caution you that these statements are only predictions and that actual events or results may differ materially. We do not intend to update these statements to reflect events and circumstances occurring after the date hereof or to reflect the occurrence of unanticipated events. Many factors could cause the actual results to differ materially from those contained in our projections or forward-looking statements, including, among others, general economic conditions, our competitive environment, risks associated with operating in Russia, rapid market change in our industry, as well as many other risks specifically related to the Group and its operations $ symbol in this press release stands for US Dollar Click on, or paste the following link into your web browser, to view the associated PDF document: http://www.rns-pdf.londonstockexchange.com/rns/6670B_1-2014-3-6.pdf This information is provided by RNS The company news service from the London Stock Exchange END
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