Russian Sea Group announces revenue for the third quarter and first nine months of 2010
The consolidated revenue (in Russian Rubles) of the Group decreased by 12.7% to RUR 10,817.4 million in the first 9 months of 2010 from RUR 12,386.9 million in the first 9 months of 2009. However, in the 3Q of 2010 the sales decrease has started to slow down as compared to the 1Q and 2Q of 2010. Thus, the Group revenue decreased by 6.7% to RUR 3,766 million in the 3Q of 2010 as compared to the 3Q 2009 and sales volumes by 3.3% accordingly.
Key Operational Indicators
Revenue, in million of RUR
Chilled and Frozen Segment
Sales volumes, tons
Chilled and Frozen Segment
Sales in Chilled and Frozen Segment decreased by 3% to RUR 3,387.7 million in the third quarter of 2010. The physical volumes in the third quarter of 2010 compared to the same period of the previous year have decreased by 2.6%. This was driven primarily by the shortage of trout and frozen salmon supply from Norway and the delay for new Norwegian factories in obtaining certification to export into Russia, raw fish prices that remained high in July and August 2010 and an extremely hot summer that has negatively impacted consumer demand. However, in September the positive trend has been observed. We achieved an improvement in sales and as a result of that our revenue increased by 21.3% to RUR 1,380.8 million and sales volumes by 15.8% in September 2010 as compared to September of the previous year.
In the Ready-to-Eat Segment sales decreased by 16.7% to RUR 702.6 million in the third quarter of 2010. The physical volumes in the third quarter of 2010 compared to the third quarter of 2009 have dropped by 11.9%. This decrease resulted from lower demand due to extremely hot summer and intensified competition. Nevertheless, September 2010 has demonstrated an increase of revenue by 4.3% to RUR 314.3 million as compared to September 2009.
Commenting on the Company results Dmitry Dangauer, the Company CEO, said: "The first half of 2010 was difficult for our Company with the results significantly below our expectations due to a number of external and internal factors which we reported on previously: shortage of raw fish supply especially of trout and frozen salmon from Norway, followed by purchase price increases; intensified competition; and limited salmon affordability impacting the Russian consumer. The exceptionally hot weather in July and August has negatively affected the consumer demand that has further contributed to the sales decrease in both segments in the third quarter.
However, the measures implemented in the beginning of 2010 have started to bring positive results in September. We have launched the packaged frozen fish fillet program in the Chilled & Frozen Segment and successful supplies to Auchan and Monetka have been realized in September. We are continuing to build our regional distribution network. In the Chilled & Frozen Segment 14 regional sales representatives have started to work and provided sales increases of almost 20% in September compared to August. In the Ready-to-Eat Segment we have reduced out-of-stock and introduced a mandatory product matrix for each store format."
Russian Sea Group was founded in 1997 and began its operations by importing herring and mackerel from Norway. In 1999, the Company launched production of the ready-to-eat fish products under its core ‘Russian Sea' brand and then continued its development as a producer and distributor of fish and fish products. At present, Russian Sea Group comprises two main business divisions, operated respectively by Russian Sea Company, and Russian Fish Company, each a wholly-owned subsidiary of Russian Sea Group.
The ‘ready-to-eat' business (Russian Sea Company) produces and sells "ready-to-eat" fish and seafood products under well-recognized brands, such as "Russian Sea","Islandka", "Selyodochka Stolichnaya", "Mediterana", "7 Uzlov" and "Flottika". These products include salted and smoked salmon and trout, red caviar, a wide assortment of herring products, seafood, seaweed products androe spreads. The Group operates a modern fish and seafood production facility in Noginsk, Moscow region (approximately 40 km from Moscow).
The Group's ‘chilled and frozen' business (Russian Fish Company) sells and distributes over 60 types of fish and seafood, including, among others, salmon, trout, cod, herring, mackerel, humpback salmon, pollack, flounder, shrimp and squid, to nationwide and regional retail chains, regional distributors and fish processing companies throughout Russia. The chilled and frozen fish and seafood business sources fish from domestic suppliers, as well as foreign suppliers from 18 countries, including, among others, Norway, the UK, the USA, Chile,Iceland,Vietnam and China. Its major international suppliers include Marine Harvest, Shetland Catch and Norway Pelagic. The Company supplies fish and seafood to over 85% of the regions of the Russian Federation.
The Group also operates a fish farming business (Russian Sea Aquaculture) which commenced operations in 2007 following the Group's purchase of a trout farm at Lake Segozero in Karelia, Russia, the entire output of which is currently sold to Russian Fish Company for further distribution.
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