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AvangardCo

January 29, 2013

Fourth quarter 2012 and 2012 full year trading update

Êyiv, Ukraine – AVANGARDCO INVESTMENTS PUBLIC LIMITED (LSE: AVGR) ( the «Company» or «AVANGARDCO IPL»), the largest producer of shell eggs and egg products in Ukraine and number one producer in Eurasia, issues its trading update for the fourth quarter and the full year ended 31 December 2012.

Total Flock

 

Units

As at 31.12.2012

As at 31.12.2011

Change, %

Total Poultry Flock

Heads
(mln)

27.5

25.1

9.6

Laying Hens

Heads (mln)

22.8

20.5

11.2

The total poultry flock was up by 9.6% year-on-year, with the population of laying hens increasing by 11.2% year-on-year to 22.8 million (2011: 20.5 million). The increase in poultry flock in 2012 was due to the construction and launch of new capacities at poultry complexes “Avis” and “Chornobaivske”.

Shell Egg Segment

 

Units

Q4 2012

Q4 2011

Change, %

2012

 2011

Change, %

Total Production

Pieces (mln)

1,602

1,557

2.9

6,287

5,955

5.6

 

Total Sales to Third Parties

Pieces (mln)

1,344

1,329

1.1

5,223

4,862

7.4

Export

Pieces (mln)

212

187

13.4

516

295

74.9

Average Sales Price

UAH (excl. VAT)

0.84

0.90

(6.7)

0.70

0.64

9.4

Production: In the fourth quarter of 2012 the Company increased its production volume of shell eggs by 2.9% year-on-year to 1,602 million units (Q4 2011: 1,557 million units). In 2012, the production volume of shell eggs increased by 5.6% year-on-year to 6,287 million units (2011: 5,955 million units) due to the increase in the number of laying hens.

Sales: In the fourth quarter of 2012 sales to external customers increased by 1.1% year-on-year to 1,344 million units (Q4 2011: 1,329 million units). In 2012, sales to external customers increased by 7.4% year–on- year to 5,223 million units (2011: 4,862 million units). The increase in sales was due to the continued expansion of sales channels, both in domestic and export markets. 

Sales Through Supermarkets: In 2012 share of shell egg sales through modern retail chains (supermarkets) increased to 35% of total sales to third parties (2011: 30%). 
Export: In 2012, the Company increased its export volumes of shell eggs by 74.9% year-on-year to 516 million units (2011: 295 million units), while in the fourth quarter of 2012 shell egg exports increased  by 13.4% year-on-year to 212 million units (4Q 2011: 187 million units). The Company continued to develop its exports markets in the Middle East and North Africa, Central and West Africa, and the CIS. Iraq, Turkmenistan, Transnistria, Liberia, UAE and other countries served as main export markets for the Company’s shell eggs.
This year Ukraine and the EU have achieved a significant progress in negotiations regarding exports of poultry products. On December 4, 2012, the European Commission’s Directorate General for Health and Consumers added Ukraine to the list of non-EU countries which are allowed to export shell eggs, egg products and poultry products to the EU. 
Several production facilities of the Company have already been certified and passed all the necessary quality and veterinary checks. Following the conclusion of final agreements we expect that the Company will start the supply of its shell eggs and egg products into the European market. 
Average Sales Price: In the fourth quarter of 2012 the average selling price of shell eggs decreased by 6.7% year-on-year to 0.84 UAH per unit, excluding VAT (Q4 2011: 0.90 UAH per unit, excluding VAT). In 2012, the average selling price of shell eggs increased by 9.4% year-on-year to 0.70 UAH per unit, excluding VAT (2011: 0.64 UAH per unit, excluding VAT) following the increase in selling prices in all sales channels and the growth of exports in the Company’s total sales.  
The brand "Kvochka" 
During 2012 sales of packaged eggs under the umbrella brand “Kvochka” increased to 36.2 million units (2011: 4.9 million units) following the expansion of sales channels. In the beginning of 2012  “Kvochka” branded products were sold only in national retail chains, however, starting from September 2012 the Company commenced supplies to regional retail chains and traditional format retail outlets through its network of distributors. As a result, at the end of the year the Company supplied its “Kvochka” branded products to more than 2,200 retail outlets, including 1,200 retail chains’ outlets and around 1,000 traditional format retail stores.     
During the year the Company launched an integrated marketing campaign targeting its "Kvochka" branded products which included the placement of promotional materials and advertising props at points of sale, outdoor advertising near points of sale and on the facades of shops, promotions and BTL-campaigns. 
In October 2012, the Company also launched a nationwide charity campaign to support sport schools for young sportsmen: AVANGARDCO IPL has pledged to donate UAH 0.05 from the sale of each package of TM “Kvochka”.

Egg Products Segment

 

Units

Q4 2012

Q4 2011

Change, %

2012

        2011

Change, %

Processed Shell Eggs

Pieces (mln)

278

268

3.7

1,078

1,053

2.4

Average Sales Price

US$/Kg (excl. VAT)

9.47

9.13

3.7

8.11

8.05

0.7

Production: During 2012  the “Imperovo Foods” egg processing plant was operating at full capacity and the volume of processed shell eggs increased by 2.4% year-on-year to 14.1 thousand tonnes (2011: 12.1 thousand tonnes).  
Export: In 2012, the Company exported its dry egg products to markets in the Middle East and North Africa, Asia. Taiwan, Turkey, Egypt, Jordan, Indonesia and other countries were main export markets for processed egg products.
Average Price: In the fourth quarter of 2012 average sales price for dry egg products increased by 3.7% year-on-year to US$9.47 per kg. (Q4 2011: US$9.13 per kg). At the end of 2012 average sales price for dry egg products increased by 0.7% to US$8.11 per kg. (2011: US$8.05 per kg).  

Investment Projects

The construction of two poultry complexes for egg production "Avis" and "Chornobaivske" in Khmelnytsky and Kherson regions is going according to schedule. 
As at December, 31 2012, the Company completed the construction and put into operation the stage one of the rearing site with the capacity of 1.581 million heads and 1.608 million heads at "Avis" and "Chornobaivske", respectively, and the stage one of the laying hens site with the capacity of 3.196 million heads and 1.750 million heads at "Avis" and "Chornobaivske", respectively. As at December 31, 2012, these poultry complexes were operating at 100%. Further, the Company has completed the construction of the elevator with the capacity of 56,000 tonnes at the “Avis” poultry complex.
To view the progress of the construction at "Avis" and "Chornobaivske" egg production complexes please visit.

“Imperovo Foods” Egg Processing Plant 
At present the Company is constructing the first stage of its capacity upgrade from 3 million to 6 million shell eggs per day at the egg processing plant, LLC "Imperovo Foods".

To view the progress of the construction at "Avis" and "Chornobaivske" egg production complexes please visit.

For investor’s requests:
Alina Korniets
AVANGARDCO IPL
Acting Head of Investor Relations
Telephone: +38 044 593 28 60
Mobile: +38 067 664 49 99
e-mail: a.korniets@avangardco.ua

FTI Consulting London
Larisa Millings 
+44 20 7269 7216

FTI Consulting Moscow
Oleg Leonov
Olga Terebova
+7 495 795 06 23

 

 

 

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