6 June 2017

Russia’s Kuban Agro announces over 8% revenue increase in 2016

Kuban Agro holding company, one of Russia’s largest agribusinesses and part of Basic Element industrial group, announces full year production and financial results for 2016. Company’s revenue reached 10.8 bln rubles, over 8% increase year-on-year.

Kuban Agro holding includes more than 20 enterprises in five divisions: agriculture, seed production, grain processing and storage, sugar production and meat processing.

The company’s revenue in 2016 rose by 8% up to 10.8 billion rubles (10 billion rubles in 2015) thanks to high indicators of crop production (soybean, corn, sunflower and barley), as well as increased milk herd’s efficiency. Net profit reached 1.7 billion rubles in 2016, a 16%-decrease year-on-year (2 billion rubles in 2015). The decrease was due to high exchange rates of foreign currencies during the period of purchase of mineral fertilizers, plant protection products and seeds which resulted in the increase of production costs. In the second half of 2016 sugar prices dropped dramatically up to 30% compared to the same period in 2015 and wheat prices decreased up to 10% compared to 2015.

Winter grains production in 2016 maintained almost the same level of the previous year and amounted to 213,569 tonnes, down 1% from 216,542 tonnes year-on-year. Hybrid corn production in 2016 grew substantially to 7,578 tonnes from 2,813 tonnes in 2015, demonstrating a record 39% increase year-on-year. Since 2008 Kuban Agro holding has created 25 hybrids of its own high-yielding corn brand. Two of the hybrids were produced and registered in 2016. Kuban Agro’s fast pace in new seed hybrids production is comparable to the world’s leading agricultural companies. The company plans to register four new seed hybrids with increased production and water yield.  

Kuban Agro meat processing division in 2016 has ramped up pig livestock from 36.000 heads in 2015 to 44.000 heads in 2016 (+22.6%). Pig gross weight gain reached 10.000 tonnes, a +37% increase. Pig farms’ volume of products sold grew by 59%. The profit of the pig complex exceeded 204 million rubles. Revenue increased by 46%. The output of two mega farms at Kuban Agro holding could be significantly higher. The growth of the indicators was significantly affected by the outbreaks of ASF in the neighborhoods of Ust-Labinsky districts and quarantine measures that resulted in the decline of the output.

Kuban Agro holding is ranked top 10 Russian largest companies in agricultural sector in terms of livestock with 16.431 heads.  The company continues to renew its dairy herd and to increase milk herd’s efficiency. The company’s dairy herd population of forage-fed cows in 2016 amounted to 8.333 heads. Annual milk yield in 2016 reached 59.297 tonnes. At the same time the number of dairy farms decreased from 13 to 10 following production optimisation programme. Raw milk revenue grew by 2% from 1.387 billion rubles to 1.416 billion rubles.

Significant progress in milk production and growth year-on-year was achieved thanks to the increase in milk herd’s efficiency, livestock population and launch of a 800-head dairy farm in Novokuban district. Annual milk yield per one forage-fed cow exceeded 7.100 tonnes. Cow’s efficiency increased to 20.8 liters of milk per day. 

Despite unfavorable climate conditions production of sugar beet increased by 28% from 399.000 tonnes to 511.000 tonnes in 2016.  Svoboda sugar refinery despite a week delay launch after the reconstruction achieved record production results in 2016. It refined 844.000 tonnes of sugar beet which is by 295.000 tonnes more (+54%) compared to 2015. Svoboda sugar refinery more than doubled the volume of external raw materials providers reaching 393.000 tonnes (+113%). Svoboda sugar refinery produced a record amount of sugar – 102.000 tonnes, 25.000 tonnes increase year-on-year. Output of dry granulated beet pulp is almost 3 times more compared to 2015 amounted to 30.000 tonnes. Almost the whole volume of pulp was sold for export. Sugar production division demonstrates 32% increase in labor efficiency.

 

 

Leonid Ragozin, Kuban Agro holding CEO:

“Kuban Agro holding continues to play a backbone role not only in Ust-Labinsky district, but also in the Krasnodar Region in general. The salary increased by an average of 10%. The budget spent on training and education of personnel was increased by 1.1 million rubles and reached 7.4 million rubles. The project "Kuban Agrischool" is continuing to attract young specialists to agricultural disciplines. Budget of various levels and extra-budgetary funds amounted to more than 1 billion rubles in 2016, the company is actively implementing social projects aimed to support veterans, attract young specialists and develop social infrastructure. In total, more than 100 million rubles were allocated for social projects in 2016”. 

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