Cherkizovo Posts 59% Profit Boost

Meat producer Cherkizovo said Wednesday that its net profits shot up 54 percent in 2009 despite a plunge in retail sales throughout the sector. 

Profits rose to $120.2 million last year, up from $78.1 million a year ago, the company said in a statement. Sales increased 12 percent to 32.4 billion rubles ($1.09 billion), up from 28.9 billion rubles a year ago. 

"Our outstanding results in 2009 allow us to call last year the most profitable for the company," CEO Sergei Mikhailov said in a statement. "It is highly important to note that we managed to achieve these results in a difficult macroeconomic situation." 

An increase in efficiency allowed the company to reduce its operational expenses by 20 percent, the company said, which also contributed to the upturn in net profits. 

Cherkizovo boosted pork production by 38 percent to 53,800 metric tons, compared with 39,000 metric tons in 2009, which boosted sales in the segment 24 percent to $139.9 million. 

Cherkizovo, which currently operates five hog lots, announced last month that it would buy two more piggeries in the Penza and Lipetsk regions from a company owned by Cherkizovo's main shareholders, Igor Babayev and his family. The acquisition is expected to raise pork production by 30 percent. 

Sales of processed meat products fell 10 percent to 130,000 metric tons, a figure that beat the sector as a whole, which saw a 20 percent fall in sales, the company said. 

Poultry production remained at the same level of 184,300 metric tons in 2009 compared with 2008, while sales decreased 7 percent to $470.1 million compared with $505.2 million in 2008. 

Last year, Cherkizovo expanded the capacity of its poultry farms in Bryansk and Penza, a move that it expects to boost its poultry capacities 40 percent by 2012.