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Ekosem Agrar milk output bucks falling Russian trend

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Ekosem-Agrar, which faces key meetings with investors next week over extending bonds, revealed its milk output had bucked the declining Russian trend – but not by enough to prevent a drop in profits.

The group said, in preliminary results, its milk output had risen by an "impressive" 17% last year to 180,000 tonnes, allowing it expand its lead as Russia's top producer.

The increase – which contrasted with a 474,000-tonne decline to 30.03m tonnes in overall Russian output last year, according to US Department of Agriculture data - was backed by a 14% rise to 25,000 animals in the Ekosem-Agrar, with the balance down to yield improvements.

However, thanks to the slide in the rouble, the group's revenues, reported in euros, at about E100m "were on a par with" those for 2014, when it achieved a figure of E97.9m.

Operating profits, at E35m-40m, were down from E44.5m the previous year, with the group saying its earnings before interest, tax, depreciation and amortisation (ebitda) would come in lower to, at E50m-55m, compared with some E60m for 2014.

'Very decent results'

Nonetheless, the group "has reached the targets set for 2015", Ekosem-Agrar said.

"Our earnings figures show that we achieve very decent results also in times of global milk price lows, record lows of the rouble exchange rate and difficult financing conditions in Russia," said Stefan Durr, Ekosem-Agrar's German-born founder and managing director.

In fact, Ekosem-Agrar early last year said it was expecting revenues of E110m-120m last year, and ebitda of E60m-70m.

However, the group in half-year results modified outlook to saying that the "foundation has been laid for a successful 2015 fiscal year, even if the extraordinary results of 2014 might not be reached due to weaker currency development and higher financing costs".

Meetings loom

The results come ahead of meetings on March 16 and 17 in a second attempt to gain agreement for four-year extensions to two tranches of bonds, with a combined face value of E128m.

The first attempt to win consent failed when the meeting failed to receive the participation of the quorum of holders of the 50% of bonds needed for the agreement to be legally binding.

Ekosem-Agrar on said it requires the extension to "maintain the financial flexibility [the company] needs to complete its current investment programme for strengthening its market leadership in the Russian milk market".

By Mike Verdin

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