World meat industry news

ROS AGRO PLC (the “Company”), the holding company of Rusagro Group (the “Rusagro”), a leading Russian diversified food producer with vertically integrated operations, has announced the financial results for the six months ended 30 June 2021.

1H 2021 HIGHLIGHTS

- Sales amounted to RUB 104,372 million (US$ 1,404 million1 ), an increase of RUB 32,210 million (US$ 433 million, +45%) compared to 1H 2020;

 - Adjusted EBITDA2 amounted to RUB 22,119 million (US$ 298 million), an increase of RUB 10,217 million (US$ 137 million, +86%) compared to 1H 2020;

 - Adjusted EBITDA margin rose from 16% in 1H 2020 to 21% in 1H 2021; - Net profit for the period amounted to RUB 17,600 million (US$ 237 million), an increase of RUB 7,870 million (US$ 106 million, +81%);

 - Net debt position3 as of 30 June 2021 amounted to RUB 66,844 million (US$ 924 million);

 - Net Debt/Adjusted EBITDA (LTM4 ) as of 30 June 2021 was 1.57x.

Commenting on the results, Maxim Basov, a member of the Board of Directors of ROS AGRO PLC and CEO of the Rusagro, said: “In 2Q 2021 Rusagro showed growth of adjusted EBITDA backed by revenue increase across Agriculture, Oil & Fats, Meat business segments. Revenue growth was triggered by positive trends both in sales volume and sales prices. Sugar sales decreased due to sales volume reduction partially compensated by sales price growth. Adhering to its mission of making people’s lives longer and better, Rusagro continued to participate in the market initiative to provide Russians with affordable food supplies and limited its sales price of sugar and bottled sunflower oil to retail. Thus, sales price of sugar to retail chains in Russia in bags of 50 kg on the basis of the plant didn’t exceed 36 roubles/kg inclusive of VAT and sales price of bottled sunflower oil at the plant didn’t exceed 95 roubles/litre inclusive of VAT. In 2Q 2021 Rusagro improved adjusted EBITDA margin of Agriculture and Oil & Fats segments as Revenue grew higher than corresponding increase in costs. EBITDA margin of Sugar and Meat segments followed negative influence of higher sugar beet price for Sugar segment (-2 p.p.) and higher costs of feed and animal health protection as well as additional expenses relating to the start of operations in Primorie for Meat segment (-4 p.p.).”

MEAT SEGMENT

In 1H21 Meat segment earned RUB 3,094 million of adjusted EBITDA (+32% y-o-y) with 17% margin (+0 pp y-o-y).  

Sales of the Meat segment increased by 29% in 1H21 and by 32% in 2Q21 compared to the respective periods of the prior year due to the growth of average sales price of meat products by 24% and 26% respectively. The growth of total sales volume by 4% in 1H21 compared to 1H20 triggered by 3% pigs production increase achieved as new pig farms in Tambov Region reached full capacity.  

Cost of sales increased by 27% in 1H21 and by 31% in 2Q21 compared to the respective periods of the prior year mainly due to higher costs of feed and animals health protection.

Net gain on revaluation of biological assets and agricultural produce in 1H21 resulted mainly from an increase in market prices for both bearer and consumable livestock pigs during the reporting period compared to market prices at the end 2020 and respective increase in fair value of livestock in the closing balance.

An increase in Distribution and selling expenses in 1H21 in comparison to 1H20 is mainly due to the rise in the costs of marketing activities. General and administrative expenses in 1H21 compared to prior year period increased mainly due realization of pork production cluster project in the Primorie Territory.

An increase in Other operating income in 1H21 in comparison to 1H20 is mainly due to partial reimbursement of feed purchase costs and investment loans interest.