Russia’s Kuban Agro holding reports 49% net profit rise in 2014

Kuban Agro holding, one of Russia’s largest agribusinesses and part of Basic Element industrial group, announces full year production and financial results for 2014, noting a 49% rise in net profit year-on-year, which is the company's largest net profit growth since 2002.

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Headline results:

· Net profit totaled 1.1 billion rubles ($28.5 million as per USD/RUB average weighted exchange rate in 2014), a 49%-increase compared to 743 million rubles in 2013

· The company’s revenue reached 7.3 billion rubles ($189 million as per USD/RUB average weighted exchange rate in 2014) compared to 6.7 billion rubles in 2013 ($210 million as per USD/RUB exchange rate in 2013)

· EBITDA margin decreased to 28% compared to 32% in 2013

Kuban Agro holding production for 2014:

· Winter grains production of 211,000 tonnes, up from 198,000 tonnes in 2013

· Sunflower production of 25,600 tonnes, up from 25,500 tonnes in 2013

· Corn production of 48,000 tonnes, down from 59,000 tonnes in 2013

· Soya beans production of 21,000 tonnes, down from 26,000 tonnes in 2013

· Sugar beet production of 434,000 tonnes, down from 450,000 tonnes in 2013

In 2014, Kuban Agro completed two key investment projects: an 8,400-ton slaughterhouse and a 50,000 head hog farm in Krasnodar region. Over 2.6 billion rubles ($86.7 million) was invested to the projects. They reflect the company’s strategy to develop high value-added products. The slaughterhouse is the first Kuban Agro’s facility that focuses on meat processing. The launch of the slaughterhouse and the hog farm will increase profitability of the company’s animal breeding division and strengthen Kuban Agro’s position in industrial pig farming.

Along with Russia’s growing demand for locally-produced food, Kuban Agro develops its advanced laboratories focusing on animal breeding and crop farming. Kuban Agro was the first Russian agricultural company that created Embryo Biotechnology Center that deals with animal genomics. Thanks to embryo transfer technology, 62 Holstein-Friesian calves, the world’s most efficient breed, were born in Kuban Agro. The company expects to receive at least 500 purebred calves through embryo transfer by year-end.

Embryo transfer technology allows to boost herd turnover since the embryos of purebred cows are implanted to the less productive recipients. Embryo transfer not only accelerates herd turnover but also reduces purchasing costs by 30%.

Apart from animal breeding, Kuban Agro has an 8-year track record of seed selection. The company was the first in Russia to implement a full-cycle seed production, from selection to sales. In 2014, the company’s specialists produced three new hybrids of its own high-yielding corn brand Ladozhsky, in addition to 16 hybrids that have previously been produced in Kuban Agro. Market share of Ladozhsky corn hybrids in Russia reached 4.5% in 2014 (2.6% in 2013).