May 24, 2016 / 10:56 AM / 2 years ago

Russian meat company Cherkizovo swings to first-quarter net loss

MOSCOW, May 24 (Reuters) - Russian meat company Cherkizovo Group swung to a net loss in the first quarter, hit by subdued consumption and higher production and interest costs, it said on Tuesday.

Agricultural producers in Russia received a boost when the country banned many food imports in retaliation to Western sanctions over the situation in Ukraine, but the positive effect has been partly offset by a drop in consumption and prices as well as weakness in the rouble.

Cherkizovo, a major producer of poultry and pork, reported a net loss of about 441 million roubles ($6.6 million) for the three months to March 31, against a profit of almost 3 billion roubles in the same period last year.

Adjusted earnings before interest, tax, depreciation and amortisation (EBITDA) fell 76 percent to 725 million roubles, though revenue grew 8 percent to 18.5 billion roubles on the back of increased production volumes.

The company said that profitability had been hit by seasonally weak meat consumption and poultry oversupply that pushed prices lower while the weakness in the rouble had increased the cost of purchasing imported feed components.

Cherkizovo also said that its interest costs rose 65 percent year on year to 1.3 billion roubles because of higher total debt and interest rates.

Chief Executive Sergei Mikhailov said he expects to start seeing improvements in the market in the second quarter as consumers buy more barbecue food as the weather improves. ($1 = 66.9136 roubles) (Reporting by Maria Kiselyova; Editing by David Goodman)

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