Two of Russia’s largest agri-food firms, Cherkizovo Group and Ros Agro Group, have reported higher revenues in 2018, but are among a number of companies under investigation by the country’s tax authority.
Cherkizovo's financial results
Brand development for its chicken meat products and expansion of its pork capacity were key achievements in 2018, according to Sergei Mikhailov, CEO of Cherkizovo Group, commenting on the meat and poultry firm’s results for the 2018 fiscal year.
At RUB102.6 billion (US$1.56 billion), total revenue was up 13.5 percent from the previous year, while net profit was increased by a factor of two at RUB10.2 billion.
Compared to the previous year, the Cherkizovo Poultry Division achieved a 4.1 percent increase in sales volume to 544,200 metric tons (mt). Combined with a 9.1 percent increase in average selling price, the division’s revenue was up 13.5 percent at RUB53.8 billion, while operating expenses as a percentage of sales were unchanged from 2017.
Cherkizovo’s Pork Division achieved an 18.3 percent increase in sales year-on-year to 236,900 mt, and average selling price was 6.6 percent above that for 2017. As a result, revenue was 26.2 percent higher at RUB23.6 billion, while operating expenses as a percentage of sales fell slightly.
Revenue growth of 13 percent by the Meat Division was attributed almost entirely to a 12.4 percent year-on-year increase in sales volume to 229,500mt. Average selling price was down slightly from 2017.
At 696,100mt, total production by the firm’s Grain Division was up by more than 53 percent from 2017, and this was attributed by Cherkizovo to a shift to growing a larger area of wheat.
Among Cherkizovo’s corporate developments during the latest reporting period were the opening of seven new pork wean-to-finish facilities and the start-up of a fully automatic meat processing plant near Moscow. The firm also acquired the assets of poultry breeder Krasnoyaruzhsky Broiler and Altaisky Broiler, as well as a majority share of Samson Food Products.
At a recent meeting with the country’s Prime Minister Dmitry Medvedev, Mikhailov highlighted the opportunities for increased Russian exports of pork to China.
With almost one million Chinese pigs culled since last September as the result of African swine fever (ASF) outbreaks, Russia could export as much as 300,000mt of pig meat to China, he said, providing agreement can be reached between the two countries on how to zone Russia in terms of ASF, and the authorization of Russian companies with high biosafety standards for such exports.
Ros Agro reports increased meat, agriculture revenues in 2018
One of Russia’s largest agricultural holding company, Ros Agro PLC has reported a 9.0 percent increase in revenue by its Meat Business in 2018 compared to the previous fiscal year to more than RUB22.32 billion.
Production volumes by the division for the year were down slightly from 2017 for both livestock (at 202,000mt; -2 percent), and compound feed (at 567,000 mt; -6 percent). Higher average sale prices for carcasses, cuts, and other pork products helped to mitigate lower sales volumes for livestock (-53 percent) and, to a lesser extent, for carcasses (-3 percent).
At more than RUB19.94 billion, the firm’s Agriculture Business achieved a 6 percent increase in revenue for 2018 compared to the previous year. Again, higher average sale prices more than compensated for double-digit percentage reductions in sales volumes for most commodities produced.
Sugar beet is the division’s main commodity, but it also produced wheat, barley, corn, sunflower and soybeans.
While Ros Agro’s Oil and Fat Business increased revenue by 35 percent in 2018 to just over RUB26.20 billion, Sugar Business revenue was down 20 percent at RUB24.23 billion.
Previously known as Rusagro Group and RusAGRO PLC, Ros Agro Group was founded in 1995 as a sugar importer and has since grown to become the largest integrated agricultural holding company in Russia, according to the firm’s web site.
Russian tax investigation
Cherkizovo Group and Ros Agro PLC are under investigation by the Tax Service and Federal Security Service (FSB) for suspected tax evasion, reports Reuters.
Both companies confirmed to the news agency that inspections had been carried out, but denied any wrongdoing.
