RUSSIA, Moscow. Cherkizovo Group, the largest vertically integrated meat producer in Russia, announced its unaudited consolidated IFRS results for the period ending June 30, 2018.
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