22 Jun 2021 18:19

Cherkizovo could hold SPO at fairly short notice if market situation changes - IR head

MOSCOW. June 22 (Interfax) - Cherkizovo Group, one of Russia's leading meat producers, could hold an SPO at fairly short notice if the situation on financial markets changes for the better, head of the company's IR department Andrei Novikov said during a VTB Capital Investments conference on Tuesday.

"Our plans regarding being a public company have not gone anywhere. Our shareholders have stated publically that they see the company as 'blue chip' in the long term, at least, of the Russian FMCG sector," Novikov said. "Unfortunately, the market is complex, it is under pressure from a lot of macroeconomic indicators, the situation regarding sanctions, and holding another offering today is likely highly questionable," he said.

"If the situation changes, then our plans might change too. Basically, in terms of internal corporate procedures, the company could return to the market at fairly short notice. We have all the procedures established to go public within a very short period," Novikov said.

As reported, the board of directors of PJSC Cherkizovo Group decided in December last year to increase charter capital by placing 10,261,753 additional shares. The Bank of Russia registered the additional issue in March this year. The issue was assigned the state registration number 1-02-10797-A dated March 15, 2021.

At present, Cherkizovo's charter capital is split into 41,047,014 shares. The company would thus be increasing it 25%. It will offer 20% of increased charter capital.

Asked whether the company was planning to switch to quarterly dividend payments, Novikov said it had no such plans. "Our business is kind of seasonal, and Q1 is quite low as regards revenue, so for now we will be sticking to payments for H1 and the year," he said.

Speaking about the company's debt burden and means of lowering it, Novikov said the group "is more focused on increasing profit and does not plan to aggressively pay off debt for now." "A net debt/EBITDA ratio from 2.0x to 2.5x - this is where we see the debt level indicator this year. Probably even closer to its lower limit, around 2.0x," he said.

Last year, the ratio was 2.4x.

Cherkizovo has seven chicken complexes, among them Belaya Ptitsa, which is being used under a rental agreement; 16 pig farms; five meat-processing plants; another meat-processing plant operated by a partner, Samson - Food Products which the company has a 75% stake; two slaughterhouses; nine compound feed plants; 12 grain elevators; and a 300,000-hectare seed bank. It also operates a turkey plant in Tambov through a joint venture with Spain's Grupo Fuertes.

In 2020, the group's revenue rose 7.2% to 128.8 billion rubles, and net profit more than doubled to 15.2 billion rubles from 6.8 billion rubles in 2019. Adjusted EBITDA increased 28.8% to 26.6 billion rubles, and the margin rose 350 basis points to 20.6%.

Cherkizovo's main owner is the family of its founder, Igor Babayev. His sons, Yevgeny and Sergei Mikhailov, own 28.1% each according to data as of October 2020. Their mother, Lidiya Mikhailova, holds 15.46%, LM Family Trust owns another 15.1% and Grupo Fuertes has 8%. The free float is a little over 2%.