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Rus Agro pledges further diversification, after poultry rebuff

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Ros Agro pledged to further diversify its Russia food and agribusiness, after failing to buy its way into the poultry sector.

On Monday Ros Agro announced high-tech greenhouse facility to meet the demand of sanction-hit Russian consumers.

Ros Agro, the London-listed holding company for the Russian sugar-to-meat business Rusagro, announced a polity of market share expansion and "geographic and business diversification," at an analyst's day on Tuesday.

Capital expenditure to hit new highs

On Monday Ros Agro boss Maxim Basov said the company's capital expenditure could hit new highs this year, at 15-20bn roubles, as a number of new projects were launched.

The expenditure would include a massive greenhouse development, to meet Russian demand for domestically produced fruit and vegetables, as well as expanding sugar capacity, and a pork production project to be developed near Vladivostock.

Mr Basov said Ros Agro was working on a number of deals that could require the issue of new shares.

Green house development

Ros Agro on Monday announced a large green house project, in the Tambor region.

The 24bn rouble ($350m) investment would allow for the construction of 100 hectares of irrigated, climate controlled greenhouses, for the year round production of cucumbers, tomatoes, lettuce and herbs.

Russia banned the import of vegetables from the EU, and other western countries, in retaliatory sanctions resulting from the Ukrainian conflict.

VTB Capital said the greenhouse development could lift the company's earnings before interest, taxation, depreciation, and amortisation, by 15-20%.

"Import sanctions against European and Turkish vegetable producers have led to a significant deficit on the Russian market resulting in price inflation," Ros Agro said in its analyst day report on Tuesday.

Sugar mill expansion

The company also announced on Monday that it would take over three beet sugar mills from from Russian agribusiness Razgulay.

"The announcement is-in line with previous comments and we forecast beet refining capacity to go up 40% to 50k tons aday for the next sugar season in autumn," said VTB Capital.

VTB saw Ros Agro's harvested area of beet rising by 20% to 470,000 hectares in the next season.

The company may make more acquisitions, including buying one or two more assets from Razgulay, Mr Basov said.

Poultry takeover fails

In September last year, the company announced that it had an investment warchest of some 100bn roubles ($1.44bn) to spend in acquisitions over the coming years.

And Ros Agro has money burning a hole in pocket, after a planned takeover of the poultry producer Uralboiler fell through in December last year.

Ros Agro this month announced the construction of a 100,000 tonne livestock pork facility in Ussuriysk, which lies a short distance north of Vladivostok in Russia's far East, was scheduled to start this summer.

By Agrimoney.com

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