Russian Sea cuts net losses by third in H1
MOSCOW. Oct 5 (Interfax) - The company group Russian Sea cut its net losses by a third year-on-year in the first half, to 290.6 million from 442.7 million rubles.
Russian Sea had negative EBITDA (earnings before interest, taxes,
depreciation, and amortization) of 68.1 million rubles in H1 2012 versus a positive 265.9 million rubles a year earlier, a company statement says.
Russian Sea sales revenues contracted 11.8% to 7.607 billion rubles, as net profits rose 6.5% to 979 million rubles.
"Generally the company's results improved although the pace of positive changes is below our expectations. The group continues to generate EBITDA loss. However the loss was significantly decreased as compared to the same period of last year," Russian Sea's General Director Timofei Tarasov is quoted as saying.
"Sales in [the] chilled and frozen segment decreased by 11.1% in the first 6 months of 2012 as compared to the first 6 months of 2011 - from 6.6943 million rubles to 5.9516 million rubles. Gross margin reduced from 10.9% in the [first half] of 2011 to 9.4% in the [first half] of 2012. Gross margin decrease resulted primarily from the need to sell off stock of Far Eastern and pelagic fish formed at the end of 2011. Driven by market price volatility gross margin of these sales was well below company average," the company said.
"Sales in [the] ready-to-eat segment decreased by 16.8% to 1.6009 million rubles in the first 6 months of 2012 from 1.9251 million rubles in the first 6 months of 2011. Sales reduced in the modern retail trade channel as a result of company policy not to sell branded products on tender basis. Besides, the company stopped [selling] significant volumes of salmon roe under Chingai and Soviet brands due to systematically unsatisfactory gross margin of this product. The segment's gross margin went up in the first 6 months of 2012 to 20.7% from 6.2% in the same period of 2011," Russian Sea said.
"The main target till the end of the year is to maintain gross profit margin and boost sales," Tarasov is quoted as saying in comments on the financial results of the company's ready-to-eat segment. "A number of initiatives are implemented in order to achieve this. In the delicacy red fish category we redesigned and upgraded package of our main product line, launched an economy line and will launch a premium line in October 2012. We also started to sell salmon roe of a new fishing season in a new design. Besides we introduced to the market a new series of salmon roe "by fish species". More innovations will follow in the fourth quarter," he said.
Aquaculture revenues amounted to 88.1 million rubles in January-June, of which 54.9 million rubles came from sales to external buyers (3.9 million rubles in H1 2011). The gross profit margin increased to 19.1% from 16.7% in H1 2011.
"It is important to note [the] significant influence of [the] seasonal factor on businesses [in the] fish industry. First half of the year is traditionally the most difficult while in the third and especially fourth quarter demand for fish products grows which has a positive impact on business results," Tarasov said. "In [the] chilled and frozen segment we see positive dynamics and improved sales results already in the 3rd quarter of 2012. Revenue earned in the third quarter offset the gap accumulated in the first half of the year. Salmon and trout sales grew significantly in modern retail trade channel and in the regions. Other product categories such as imported and Russian pelagic fish, Asian assortment sales also increased. We expect to improve revenue and profit indicators in the fourth quarter which is traditionally a high season for fish and seafood," he said.
Russian Sea's general and administrative expenses contracted 6% to 276.2 million rubles in the first half. Commercial expenditures were down 12.9% at 819.8 million rubles. "Transportation costs, in particular inter-branch deliveries and loading and unloading costs, were reduced as a result of improved inventory turnover at the Company's warehouses. Russian Sea['s] warehouse move to Noginsk led to [a] rent decrease," the statement says.
"We are pleased to report that the Group successfully refinanced its credit portfolio. Further priority for management in this area will be a reduction of interest rates and creation of an optimal maturity schedule," Tarasov said.
Set up in 1997, Russia Sea includes the companies Russian Sea (ready-to-eat products), Russian Fish Company (distribution of refrigerated and frozen fish), and Russian Sea Aquaculture (fish-farming).
Last year, the Russian Sea group founder Maxim Vorobyev's RS Group and Gennady Timchenko's Volga Resources set up a joint company that holds 60.9% of OJSC Russian Sea Company Group. Half the new company's stock belongs to RS Group and the other half to a wholly owned Volga Resources subsidiary.