Roman Abramovich dropped eggs

The buyer was Chelyabinskaya Poultry Farm JSC, which will now be able to increase egg production by 40%, to more than 1 billion eggs per year. Prodo could refuse to produce eggs due to the lower profitability of this area compared to meat production.

At the end of 2021, the Prodo Group sold the Chikskaya poultry farm in the Novosibirsk Region to Chelyabinskaya Poultry Farm JSC, follows from the buyer’s message. Prodo confirmed to Kommersant that the deal was closed without disclosing its terms. “Chikskaya” specializes in the production of eggs, the capacity is about 300 million eggs per year. In 2020, the revenue of Prodo Poultry Farm Chikskaya JSC grew by 15.1%, to RUB 1.58 billion, while net profit decreased by 31.7%, to RUB 36.17 million, year-on-year. According to Agrifood Strategies, poultry assets are valued based on annual revenue less debt.

Consequently, “Chikskaya” could cost up to 1.6 billion rubles.

Prodo is a major Russian producer of poultry meat, sausages, semi-finished products and meat products. Founded in 2004 with funds from Millhouse, the asset manager of Roman Abramovich (ranks 12th in the Forbes rating with a fortune of $14.5 billion) and partners. Andrey Gorodilov owns 50% in Prodo LLC, and Yefim Malkin and Irina Panchenko, top managers from Mr. Abramovich’s team, own 25% each. In 2020, Prodo produced 192 thousand tons of poultry meat, which corresponds to the seventh place in Russia, the National Union of Poultry Breeders previously reported. Consolidated financial performance of the group is not disclosed.

Poultry farm “Chelyabinskaya”, according to reports, is one of the ten largest egg producers in the Russian Federation. In 2020, it increased its output by 11.6%, to 716.7 million units, year-on-year. It produces eggs under the brands Chepfa, Three layers, as well as under its own trademarks Pyaterochka (part of the X5 Group), Magnit, Vkusvilla, etc. In 2020, the company’s revenue grew by 12.9% , to 3.23 billion rubles, net profit increased by 88.8%, to 377.96 million rubles. The main owner is Pavel Kadushin. On January 9, the office of Chelyabinsk Poultry Farm JSC did not respond to Kommersant’s request.

According to a representative of Prodo, the decision to sell the enterprise has been ripe for a long time, since egg production is a non-core business for the group.

Following the deal, Prodo will focus on developing its poultry and meat processing assets, as well as improving its overall performance, the company said. Agrifood Strategies President Albert Davleev notes that the average profitability in egg production today is at the level of 3-5%, which is lower than in meat poultry farming. In addition, poultry farms specializing in eggs and meat do not have synergy due to different production cycles and distribution channels, he points out. According to the expert, because of this, major players prefer to build integration around one category.

The Chelyabinsk poultry farm’s deal with Prodo may allow it to increase egg production to 1 billion eggs per year. According to Galina Bobyleva, General Director of Rosptitsesoyuz, this corresponds to the indicators of market leaders. The largest player, the Volzhanin poultry farm, produces about 1.5 billion eggs a year.

In general, Ms. Bobyleva notes, in 2021, egg production in Russia remained at the level of 2020 – 44.8 billion eggs.

The industry is also characterized by rising costs due to higher cost of resources, and the volume of egg production depends on demand, which remains stable, she points out.