News last update:Feb 25, 2016

Cherkizovo H1 2014 results looking good for pork division

Cherkizovo Group, Russia’s leading integrated meat producer, has released its H1 2014 figures, which show the company's pork division regaining ground after a challenging H12013.

According to Sergei Mikhailov, Cherkizovo CEO, 1H 2013 was a challenging period with significant losses in the pork division due to expensive grain and a plunge in pork prices, and the Group was on the verge of losses. The H1 2014 figures show a return to normal profitability.

Milkhailov said: "The favourable market environment allowed us to compensate for the significant losses in the pork division we had last year due to expensive grain and a plunge in pork prices, and thus to get back to implementing the investment projects we had to freeze."

In 1H14 the company invested RUB 2.8 billion (€57.59 mln) into CAPEX projects and also made a major investment and an important step toward poultry market leadership with the RUB 5 billion acquisition of Lisko Broiler. Lisko almost fully integrated into the production, logistics and sales infrastructure.

They also recently relaunched their core meat processing brand, changing its name to Cherkizovo. This was a well-timed action, as the situation on sausage market looks difficult due to very expensive raw meat. The company believes that the diversified business model will allow them to partially offset losses in meat processing with the profits from the livestock breeding divisions.

In his comments on the results Mikhailov aslo mentioning that although the Debt/EBITDA ratio has returned to a level that is comfortable for shareholders, they are seeing an increase in the cost of money and delays in interest reimbursement subsidies. These factors may negatively affect the Group's business development.


  • Revenue increased by 12% to $872.3 million for 1H14 from $779.6 million in 1H13
  • Gross Profit increased by 69% to $255.1 million for 1H14 from $150.6 million in 1H13
  • Gross margin increased to 29% from 19% in 1H13
  • Adjusted EBITDA* more than doubled to $176.3 million for 1H14 from $69.3 million in 1H13, indicating that the Group returned to its more normal profitability, with Adjusted EBITDA* margin amounting to 20%
  • After a very challenging 1H13, the Group achieved a Net Profit of $115.2 million in 1H14
  • Net Debt** was $791.6 million at the end of the first half of 2014
  • The effective cost of debt was 3% (2013: 3%)
  • EPS was at $2.67
  • CCR (Cash Conversion Ratio) was 119%
  • CAPEX amounted to $80 million (not including acquisition of Lisko Broiler)

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