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Annual Report 2017

About Us

Rusagro Group is Russia’s largest vertically integrated agricultural holding company. It is currently the market leader in sugar, pork, crop, oil and fats production. The Group’s land reserves consist of more than 665 thousand hectures. In 2015 a number of investment banks named Rusagro Group one of the most profitable and fastest growing consumer goods companies in the CIS. The company is listed on both the London Stock Exchange and the Moscow Stock Exchange.

Rusagro Group’s main assets are located in Russia’s Belgorod, Tambov, Sverdlovsk, Voronezh, Samara, Kursk, Orlov and Primorskiy regions, which allows us to diversify our business on a regional basis. The Group’s headquarters are located in Tambov, while the LLC is based in Moscow.

Cutting edge technology is at the heart of our business, and is integrated into everything we do, both in terms of equipment and in terms of management practices.

The geography of Rusagro sales is grows and evolves constantly. Currently we sell our products in more than 80 Russian regions and more than 35 countries worldwide.

Rusagro products are sold under the following brands:

 

SUGAR BUSINESS

    

OIL&FATS BUSINESS

    

MEAT BUSINESS

Russkii Sakhar

Chaikofsky

Brauni

Mon Cafe

Tepliye Traditsii
(rice, buckwheat)

Mechta Khoziayki

Schedroe Leto

EZhK

Gotovim Doma

Maslava

SoyaCo

Food expert

Formula chistoty

Colibri Fiori

 

 

Slovo Myasnika

 

The company has more than 14000 employees. The Group considers its employees to be its greatest and most essential asset.

As such, it gives them opportunities to unlock their potential, develop their knowledge and skills, and participate in our many interesting and innovative projects.

Corporate social responsibility is an integral and vital part of Rusagro Group’s business. The Company actively promotes the development of the regions in which we work. We take seriously our obligation to help protect the environment. We also maintain high ethical standards regarding occupational health and safety, timely payment of tax and wages, and the pursuit of a broad range of charitable activities.

 

The story of one of the largest vertically-integrated agriculture industry holding companies in Russia and the CIS began in 1995 with sugar import operations, and later import and processing of raw sugar cane in Russia. Soon the holding began to take shape, which can be divided into the following key stages:

 

 

1997-2003 Asset acquisitions

The Group acquires its first sugar plants in Belgorod region to maximise sugar trading profits.

In order to supply sugar plants with sugar beet, the Group launches its own agriculture project in Belgorod region. Our land use strategy provides for efficient sugar beet transport logistics – the distance from field to plant never exceed 60 kilometres.

Building an integrated vertical for agriculture production, the Group acquires elevators to provide storage for its own grain and for trade transactions.

The Company expands into the production of vegetable oil and oil and fats production, which will later become a separate division.

The Company focuses on expanding its presence on the Russian sugar market and launches its first retail brand in 2003.

 

The Company focuses on expanding its presence on the Russian sugar market and launches its first retail brand in 2003.

 

 

2004-2005 Establishment of the Rusagro Group

The holding company is incorporated.

The oil and fats division of the Group expands its presence on the market, acquiring assets in Voronezh region and Krasnodar territory.

The company substantially expands its land holdings in Belgorod region.

 

The Group optimises portfolio by selling grain trading and elevator facilities that were not involved in the production and storage of the Company’s own grain.

 

 

2006-2007 Consolidation and expansion

The Group focuses on sugar and agricultural businesses and decides to sell oil and fats assets in the south and centre of Russia.

The Group invests the money raised into expanding its land holdings, the main aim of which is to provide sugar beet – our most profitable crop – for the Group’s sugar plants in Belgorod and Tambov regions.

 

We launched a project to build a state-of-the-art pig breeding complex on company land in Belgorod region.

 

 

2008-2010 Market leadership

After acquiring two of the largest sugar plants in Russia, the Group becomes one of the leading sugar manufacturers in the country and one of the retail market leaders.

The pig breeding complex in Belgorod region is completed and reaches projected capacity. Construction of a new complex begins in Tambov region.

 

The Group continues to expand its land holdings and at the same time increases the general crop yield by using cutting edge equipment and technology.

 

 

2011-2013 Entering the international capital market

2011 - the most important event of the year - access to international capital markets. The initial public offering took place on the London Stock Exchange and brought the Company about $300 million to finance long-term investment programs.

 

In general, 2011 was a time of both record production but also high price volatility. Our production of vegetable oil resumes.

As a result of the modernisation of production lines in 2011, our total processing capacity of sugar beet has been increased by 13%, while the production capacity of the packed and compressed sugar (the single most promising area) has grown by 33%. The brand "Russian Sugar" was recognised as "Product of the Year" by National Trade Association.

2012 – the company demonstrates the highest rate of EBITDA, making use of the positive business environment, making record investments.

 

In 2012 the first time our agricultural business became the most profitable sector, with projects on automation and precise farming having started.

Our meat business is growing and accumulating assets as we build new pig farms and a new modern slaughterhouse complex in the Tambov region.

In our oils and fats business, 2012’s main landmarks were the first anniversary of the Bezenchuk oil extraction plant, and the purchase of the brand "Mechta Khozyaiki”, the factory of which in Yekaterinburg has begun production of mayonnaise. In total, our oil and fat business delivers record results.

Adopted dividend policy - 25% of net profit under IFRS has been accepted.

2014 - 2015

2014 – Despite many challenges, including a background of lending instability, the reduction of state support for exchange and interest rates, changes in the retail trade and the reduction of consumer income, Rusagro continues to break record. As a result, the Group's revenue rose to 59.1 billion rubles, EBITDA has reached 18.1 billion rubles, while net profit amounted to 20.2 billion rubles.

 

The largest contribution to growth in EBITDA has been from the meat business. Increased returns in this sector is due to the commissioning of new production facilities in the Tambov region. The company has become the second largest pork producer in Russia.

The sugar business has shown a significant increase in sales. Ruble devaluation and high quality raw materials have a positive influence in that business.

The agricultural division remains the basis of the Group, supplying raw materials to other business sectors. The success has been achieved with a high yield and a competitive price level.

In 2014 our oil & fats business has also showed growth. The Group has examined a number of investment projects.

2015 – A number of investment banks named Rusagro as one of the most profitable and fastest-growing companies in the world in the CIS consumer market. Every business division has new assets.

 

Land, fat and oil assets have been purchased in Primorsky Krai, while a new project to build a pig-breeding facility in Primorskiy region has been started. This is expected to foster exports to China.

Development of meat production continues with fresh facilities being commissioned and new releases to the retail consumer market. Rusagro purchases the debts and shares of the Razgulyai company, which allowed us to grow sugar business with several additional sugar factories and extra land. The acquired assets will enhance significantly sugar and agricultural business.

 

The investment volume has reached 15 billion rubles, which were distributes to all business divisions.

 

 

2016 - 2017

2016 – the Company acquires 3 new sugar plants in Kursk and Orel regions, and a land bank and cereal plant in Voronezh region. Our sugar business sets a new record in sugar production levels and launches its first molasses desugarization plant in Tambov region. Our meat business approves a project for the construction of new pig farms. The Company’s land holdings total 665 thousand hectares and our agriculture business harvests a record grain crop. Rusagro signs a Memorandum of Understanding with Mitsui & Co., Ltd. aiming to enhance the cooperation between the two companies. The Company raises USD 250 million in a secondary listing on the London Stock Exchange.

 

2017 – Rusagro harvests another record high grain crop of 1.2 million tonnes and produces another record high amount of sugar - almost 1 million tonnes. The sugar beet processing capacity of two sugar plants in Kursk has been increased and absolute leadership in the sugar retail market has been achieved. At the end of the year, the meat processing unit reaches full capacity and becomes profitable, while the Slovo Myasnika brand topped the Forbes Russia ranking of the country’s most powerful new brands. The Board of Directors approves expansion of the pig projects in the Tambov Region and the Primorye Territory.