Cherkizovo Group posted $108.4 million in US GAAP net profit in January-September 2011, which was a decrease of 1% from $110 million in the same period of 2010, the company said in a statement. In ruble terms, the company's net profit went down by 6%. The group's results proved better than the market earlier expected. Analysts forecast the company's net profit at $104.9 million for January-September 2011. Cherkizovo's adjusted EBITDA increased 1% in rubles and 6% in dollars to $177.9 million in comparison with $167.7 million for the same period of 2010. The company's EBITDA margin went down to 17% from 19% a year previous (consensus forecast $170 million and 15.6%). The group's sales revenue increased by 18% in rubles in the nine months and 24% in dollars to $1.077 billion. Operating profit fell 1% to $128.1 million, and the operating margin was down to 12% from 15% in the same period of 2010. Gross profit grew 6% in rubles and 11% in dollars, reaching $270.1 million. The gross margin stood at 25%, versus 28% a year earlier. "Despite the challenging operating environment at the beginning of this year, we have delivered a solid performance across all segments in the first nine months of 2011, in line with our targets," CEO of Cherkizovo Sergey Mikhailov is quoted as saying in the statement. "We are pleased to be returning to normalized profitability levels, offsetting the negative performance at the beginning of the year. Accordingly, management is optimistic that we are on track to meet expectations for the full year, confirming our status as the leading company in the industry," the statement said. In Q3 2011, the company's net profit grew 12% in rubles and 18% in dollars to $42.6 million. Revenue totaled $294.7 million, 32% more than a year ago (25% in rubles). Adjusted EBITDA was up 25% in rubles and 32% in dollars to $72.2 million. The EBITDA margin was 19% - the same as a year ago. Gross profit grew 25% (19% in rubles) to $100.4 million, while gross margin was down 1 percentage point to 26%. At the end of the reporting period, Cherkizovo's net debt stood at $709.4 million, or 22.611 billion rubles. It had total debt of $741 (23.62 billion rubles), with long-term debt accounting for 70% of its total debt portfolio. "For the nine months of 2011 under government decree 1247-p, agro-industrial companies have received direct government support for pork, poultry and egg production due to extraordinary weather conditions in the second and third quarter of 2010 that resulted in sharp cost increases. Cherkizovo Group has applied for these subsidies on the basis of its actual production volumes. This corresponds to 396 million rubles in the poultry segment, or $13.8 million, and 168 million rubles, or $5.9 million, in the pork segment," the press release said. Cherkizovo received interest reimbursement of $42.6 million in January-September 2011. Capital investments in property, plant and equipment and maintenance amounted to $152.7 million in the nine months of 2011. Of that, $63.3 million was invested in the poultry division, mainly in breeding and incubation sites, as well as slaughter and processing sites within the capacity increase projects at the Bryansk and Penza clusters; $81.9 million was invested into the pork division, mainly into the construction of three pork complexes, and $7.5 million was invested into the meat processing division, the press release said. Revenue from the poultry division grew 35% to $504.8 million in January-September 2011, while gross profit was up to $119.6 million, from $110.9 million a year earlier. The average price for poultry sales grew 8% in dollars in the nine months, although in Q3 prices were maintained at the Q2 level. Revenue from the pork division was up 24% to $196.6 million, and gross profit grew 12% to $75.9 million. The average price for pork sales in dollars grew 15%. In both divisions, the gross margin fell due to production cost growth. In the meat processing division, revenue grew 25% to $472 million, while net profit rose 17% to $76 million. The gross margin was down 1 percentage point to 16% due to an increase in meat prices and a growth in labor costs and social tax. "We have confirmed our status as the most active operator in the Russian meat sector through the acquisition of Mosselprom, one of Russia's best known poultry producers, at the start of 2011. We have also started construction of the country's largest poultry production complex in the Lipetsk region," Mikhailov said. "Our results in the pork segment demonstrate that we have successfully overcome the consequences of last year's extreme weather conditions, and are now witnessing production growth. In the course of the first nine months of the year, we have launched three breeding facilities at our greenfield pork farms in Tambov, Voronezh and Lipetsk. We have also integrated our new asset 'Orelselprom,' which was acquired through the Mosselprom transaction," he said. "In the meat processing segment we see a steady increase in demand for our meat products, while this year we are concentrating on improving the product mix in favor of value added products," Mikhailov said. "In terms of the pricing environment, we see that in poultry the prices so far this year have been relatively flat, while in pork they have demonstrated some growth," he said. "Overall, management is optimistic that the Group will produce a strong financial performance for the full year in line with our expectations and will further continue to deliver against its strategy," he said. Cherkizovo Group includes seven meat processing plants (in the Moscow, Penza, Ulyanovsk and Rostov Regions and Krasnodar Territory), four hog and two poultry complexes and a feed plant. It raised $251 million in an IPO on the London Stock Exchange (LSE) in May 2006. The group is controlled by Igor Babaev and members of his family.