Finance Cherkizovo Group announces first half results
In the poultry division sales volumes in 1H18 increased by 5.3% and amounted to 26,853,000 t. Gross profit declined by 4.7% y-o-y to RUB 5.5 bn, due to higher production volumes and associated higher cost, offset by lower prices. Gross margin was 22.9%, vs. 24.2% in 1H17. Operating expenses as a percentage of sales amounted to 12.0%, an increase from 10.4% in 1H17. Operating income decreased 20.7% y-o-y to RUB 2.6 bn. Operating margin fell to 10.9% in 1H18 from 13.9% in 1H17. The segment’s profit before income tax amounted to RUB 2.3 bn. Adjusted EBITDA declined 26.2% y-o-y to RUB 3.0 billion, while adjusted EBITDA margin decreased to 12.6% from 17.2% a year ago.
In the pork division sales volumes in the first half of 2018 increased by 17.7% y-o-y, to 10,983,000 t. The segment’s total sales increased by 11.6% y-o-y to RUB 10.0 bn. Gross profit doubled y-o-y, to RUB 7.9 bin due to higher sales volumes, further improvement in operational KPI’s and a non-cash change in the fair value of biological assets of RUB 3.9 bn (net of the revaluation, gross profit increased by 35.2% to RUB 4.0 bn). The segment’s gross margin stands at 78.5%, up from 44.2% in 1H17. Operating expenses as a percentage of sales amounted to 3.8%, compared to 1.3% in 1H17. Operating income was up 94.5% y-o-y, to RUB 7.5 bn from RUB 3.9 bn in 1H17. The segment’s operating margin increased to 74.7% from 42.9% in the first half of 2017. The segment’s profit before income tax amounted to RUB 7.2 billion compared to the 1H17 result of RUB 3.7 bn. Adjusted EBITDA increased by 24.8% y-o-y to RUB 4.2 bn. Adjusted EBITDA margin improved to 42.0% vs. 37.6% in 1H17.
In the meat processing division sales volumes in 1H18 were up 19.6% y-o-y to 11,053,000 t. The segment’s revenue increased by 12.7% and reached RUB 17.6 bn. Gross profit declined by 15.6% y-o-y to RUB 2.3 bn. The gross margin fell to 13.1% from 17.5% a year ago. Operating expenses as a percentage of sales amounted to 11.7%, vs. 12.0% in 1H17. Operating income decreased by 71.3% y-o-y to RUB 249 mill. from RUB 870 mill. in 1H17. Operating margin decreased to 1.4% from 5.6% in 1H17. Adjusted EBITDA declined by 48.8% to RUB 614 mill. from RUB 1.2 bn in 1H17.
First half financial highlights
- Revenue increased by 5.1% y-o-y to RUB 45.5 bn from RUB 43.3 bn in 1H 2018.
- Net change in fair value of biological assets and agricultural produce amounted to RUB 7.0 bn in 1H18, compared to RUB 1.2 bln in 1H17.
- Gross profit was up by 39.1% y-o-y to 17.9 bn from RUB 12.9 bn a year ago.
- Adjusted EBITDA declined by 14.0% and amounted to RUB 7.0 bn. Adjusted EBITDA margin was 15.3%.
- Net profit reached RUB 8.7 bn, up 70.5% from 1H17.
- Net operating cash flow decreased by 25.9% to RUB 4.8 bn.
- Net debt amounted to RUB 50.7 bn as of June 30, 2018