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Thai takeover of top Russian meat plant nearly done

Post a commentBy Eugene Vorotnikov , 24-Feb-2017

OMPP declared sales revenues of US$627m in 2015
OMPP declared sales revenues of US$627m in 2015

Talks to acquire a top Russian meat factory, the Ostankino Meat Processing Plant (OMPP), could be concluded by Thailand's CP Foods arm Charoen Pokphand Foods (overseas) LLC (CP Foods) next month.

Russian newspaper reports have suggested that the potential deal could cost CP Foods US$150-US$200 million, although the companies have not confirmed this.

The deal would be part of recently announced plans by CP Foods parent, Charoen Pokphand Group, to establish a food supply chain in Russia from farm to final processing and manufacture. A spokesman for Charoen Pokphand Group Russia confirmed to GlobalMeatNews that the talks were ongoing, but that no final decision on terms had yet been taken.

In the meantime, representatives of OMPP declined to comment, saying only that CP Foods was not the only bidder for the company, which is a key pigmeat producer.

An official spokesman for Alexander Tkachev, Russia’s agriculture minister, welcomed the prospect of a deal, which he predicted would lead to significant investment in the Russian meat processing industry. He said: “The CP Group already has a strong presence in the meat sector in Russia, as the company operates pig farms in the Moscow, Kaluga and Kursk regions, designed for 77,000 head. Also, it owns 75.82% of Russia Baltic Pork Invest ASA, which has two plants in the Kaliningrad and Nizhny Novgorod regions, designed for 180,000 pigs each.”

St Petersburg

In addition to growing its Russian pork business, in 2015, CP Group purchased two poultry units near St Petersburg, able to produce 180,000 tonnes (t) of chicken meat annually.

OMPP sells more than 100 different products under the brands of Ostankino and Papa Mozhet. The company operates pig complexes in the Moscow and Smolensk regions, with a total capacity of 45,000t of pork per year. It also has a more general plant in Moscow producing sausages, frankfurters, wieners, hams and chilled meat.

OMPP’s declared sales in 2015 by volume were 190,000t of meat products, with revenues of RUB36.7 billion (US$627m), with profits of RUB812m (US$13.88m). The company is owned by its founder and CEO Mikhail Popov. Currently, OMPP holds up to 5% of the Russian meat processing market.

In 2016 the consumption of sausages and other meat products in Russia fell by 2% last year, to 2.41 million tonnes, compared to 2016, with recession in Russia harming consumer purchasing, according to figures supplies by Russia’s agriculture ministry. This resulted in average prices for meat products in Russia falling by 10% year-on-year, to RUB88.20 (US$1.53) per kilo, said ministry officials who predicted, nonetheless, that the market would stabilise this year.

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