News update:Mar 9, 2016

Cherkizovo: Strong Q3 results despite volatile market

Russian meat producer, Cherkizovo Group, has reported strong Q3 results buoyed by a recent poultry acquisition.

Cherkizovo Group acquired Lisko Broiler, one of the country's largest poultry producers, in Voronezh region. The deal is based on the enterprise value of approximately RUB 5 billion. As a result of the acquisition, Cherkizovo increased its market share by 2 p.p. to 13%, making an important step to the poultry market leadership.

Also supporting the company's growth is the fact that it has continued to invest its profits into long-term investment projects, such as the recently reported, Eletsprom (Lipetsk region) and Mosselprom (Moscow region).

The company's Tambov Turkey project is well under way. Cherkizovo Group and its partner, Grupo Fuertes, continued the construction of production facilities in Pervomaisky District of the Tambov region;  Sberbank of Russia provided Cherkizovo Group the first tranche as part of the line of credit for the construction of a turkey meat production plant.

Commenting on the results, Sergei Mikhailov, Cherkizovo CEO, stated: "Despite the increasing volatility on both meat/grain and currency markets, Cherkizovo Group demonstrated strong 9 months and 3Q results. The Company continues to develop through the combination of organic growth, investing into new projects and improving the efficiency of existing ones, and strategic acquisitions, such as acquisition of Lisko-Broiler in 1Q. Meat prices in the period were quite strong, which made it possible to achieve high profitability in the poultry and pork segments, but at the same time the meat processing division was under pressure and its profitability decreased significantly. Now pork prices returned to the level seen at the beginning of the year after reaching historical highs."

"Looking forward, the macro situation looks difficult in general. Sharp devaluation of the local currency that influences direct and indirect costs, predicted consumption slowdown and growth of interest rates for loans will be limitation factors for the future growth. However, we are confident that a well-balanced, vertically integrated business model of our Company will allow us to cope with negative trends and achieve maximum benefits out of positive trends."

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