Cherkizovo Group posts 1H 2010 net income of $71.4 million

Russia meat producer, Cherkizovo, has posted a 1H 2010 net income of $71.4 million under IFRS.

The bottom line is up 42% from $50.3 million net income posted in 1H 2009, with adjusted EBITDA up 36% year on year to $109.0 million, on the back of a 26% year on year increase in revenues to $579.9 million.

Cherkizovo attributed the results to strong organic growth across all segments. Sergey Mikhailov, Chief Executive Officer of Cherkizovo Group, said that the stabilization of market prices on raw materials for meat production is expected to continue.

" While our results were somewhat affected by the tighter pricing environment with poultry and pork prices coming off from the unusually high levels of last year, prices are now recovering and we expect a positive pricing environment throughout the remainder of the year.At the Group level, we intend to secure grain stock for 2011 in the course of this year, and are currently implementing this strategy. At the same time, grain price increases from an operations perspective will predominantly affect the fourth quarter of this year and may lead to domestic meat price inflation.”

However Mikhailov added that recently acquired production assets should support output growth against a backdrop of rising demand as consumer confidence improves.

“As expected, the Pork division has enjoyed significant growth which should be further supported by the upcoming integration of the two new farms. Moreover, we are pleased to announce that construction has commenced on two state-of-the-art greenfield complexes in the Tambov and Voronezh regions which are expected to become operational during 2011 and which will add 25,000 tonnes of capacity. This will take our production volumes to 140,000 tonnes by the end of 2012, further strengthening our market leadership in this high-margin business and positively affecting our overall performance.”