Cherkizovo Group saw higher volumes across all its sectors in 2017, with the biggest gains in the grain farming segment, which was 33 percent higher than 2016, according to the company.
The chicken segment saw the smallest gains – 4 percent over 2016. The meat processing segment grew 9 percent, while the pork segment grew 15 percent.
Grain farming division
In 2017, sales volumes in the segment were positively impacted by the NAPKO consolidation. Average sales price in 2017 declined by 21 percent year over year to 7.01RUB (US$0.12)/kg, reflecting elevated levels of supply on the domestic market.
Sales volumes in 2017 increased by 4 percent year over year to 522,500 tons from 500,321 tons in 2016, with similar growth dynamics in the fourth quarter vs. the third quarter – up 5 percent quarter over quarter to 137,123 tons. The growth was driven by improvement in several operational metrics across core assets of the division.
In 2017, the average selling price declined by 4 percent year over year to 88.84 RUB (US$1.58)/kg, mostly due to the higher base effect of 2016 and low summer season. In the fourth quarter of 2017, average selling price declined by 3 percent quarter over quarter to 85.20 RUB (US$1.51)/kg.
The turkey facility in Tambov reached full capacity of 45,000 tons/year in October 2017 with sales of 10,009 tons in the fourth quarter. The average sales price for turkey products amounted to 145.24 RUB (US$2.58)/kg in 2017 and 129.03 RUB (US$2.29)/kg in the fourth quarter, respectively.
Meat processing division
Sales volumes in 2017 increased by 9 percent year over year to 236,638 tons from 218,085 tons in 2016; in the fourth quarter, volumes increased by 15 percent quarter over quarter to 69,293 tons. Main drivers of growth are the group’s increase of the market share in modern retail chains and further growth of branded offering of sausages and pork meat products.
In 2017, the average selling price remained flat compared with the previous year and amounted to 147.65 RUB (US$2.62)/kg. Average price was supported by efforts in increasing value-added products in the sales mix. In the fourth quarter, average selling price declined by 6 percent quarter over quarter to 141.51RUB (US$2.51)/kg.
Production volumes in 2017 increased by 15 percent year over year to 211,750 tons (2016: 184,766 tons), while fourth quarter production volumes were up 25 percent quarter over quarter and amounted to 63,028 tons vs. 50,353 tons in the third quarter. Positive dynamics on the year-over-year and quarter-over-quarter basis is attributed to the launch of new wean-to-finish facilities that the group completed and populated over the course of the past two years, and constant enhancement in production metrics driven by long-term genetics improvement and animal health programs launched in prior years.
In 2017, the average selling price increased by 3 percent year over year to 90.77RUB (US$1.61)/kg, mostly due to the increased purchasing power of domestic consumer. In the fourth quarter, average selling price declined by 10 percent quarter over quarter to 83.75 RUB (US$1.49)/kg.