Miratorg Profit losses for beef project
Analysis company Spark has reported that Bryansk Meat Company – the Miratorg subsidiary that manages its beef clusters – saw a net loss of $40 mill. last year, compared with an $160 mill. net profit in 2016. Revenue for the company reached $248 mill. in 2017, compared to $211 mill. the previous year, primarily due to an increase in production volumes to 82,000 t from 51,600 t in 2016.
The Russian analysts have ascribed the company's profit loss to a number of factors, including shrinking state aid, a high debt burden and weak demand for beef in the Russian market.
Dmitry Sergeev, press secretary of Miratorg, said that the main factor in Bryansk Meat Company's negative financial performance was a revaluation of the company's foreign exchange-denominated loan liabilities. He stressed that the losses were in no way related to operational efficiency. "The cattle project has a very long payback period - more than 12 years – and, in the first four years, the company generates no profit margins, only makes investments and bears the costs." he explained.
In general, Bryansk Meat Company is continuing to develop successfully, growing production and processing in accordance with the planned increase in its cattle herd, as well as boosting sales of high-quality beef and expanding the geographical reach of its products, Sergeev claimed.
Miratorg's beef cluster in Central Russia is targeting a capacity of 400,000 head or 130-150,000 t of beef per year by 2020. Russian Government officials earlier estimated that, as soon as this full production performance was achieved, Miratorg could satisfy up to 20% of the demand for beef in the Russian market. The company plans to produce 100,000 t of beef in 2018.