Russian mayonnaise, margarine and packaged sugar supplier Ros Agro has reported higher first-quarter sales but seen its profitability come under pressure amid the strengthening of the rouble.
The company, the UK-listed holding business of the Rusagro Group, posted a 6% increase in sales to RUB18.78bn for the three months to the end of March.
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Ros Agro said sales from its sugar, meat and agriculture divisions rose year-on-year. However, the group’s oil and fat arm saw its sales slide amid declining prices.
However, despite the rising group sales, Ros Agro booked a 36% fall in gross profit to RUB2.33bn and a 50% in adjusted EBITDA to RUB2.41bn.
It reported an operating loss of RUB656.4m and a net loss of RUB409.8m, which compared to an operating profit of RUB1.26bn and a net profit of RUB367.2m in the first quarter of 2016.
Maxim Basov, a member of the Ros Agro board and CEO of Rusagro, said: “In the first quarter of 2017 rouble was stronger than in the first quarter of 2016 by more than 28%. Stronger rouble decreases margins of all business units given large surpluses of sugar, grain and vegetable oil in Russia.
“Margins of processing businesses – sugar and oil and fat – were further hit as raw material was bought at the end of the year when [the] rouble was weaker and prices were higher. These businesses will operate with weak margins in strong rouble export-driven environment. Meat segment improved year-to-year on higher global meat prices and improved operations. Traditionally the first quarter is the weakest quarter in the year.”
