The credit rating of PJSC “Cherkizovo Group” (hereinafter, Cherkizovo, the Company, or the Group) stems from the Group’s strong market position and very strong business profile, which is based on the strong vertical integration, very good product diversification, and high demand for the Company’s products driven by the growing consumption of meat. The financial risk profile assessment reflects very high profitability, medium leverage, high coverage, large business size, and strong liquidity. Cash flow indicators still constrain the financial risk profile assessment.
Cherkizovo is a group of enterprises that produce poultry, pork, and processed meat products. The Group also grows soybeans, wheat, maize, and sunflower, and produces feed mixtures. According to Agroinvestor magazine, in 2024 the Company ranked first among the largest meat producers in Russia for the 10th time in a row.
KEY ASSESSMENT FACTORS
Very strong business profile. The Agency assesses Cherkizovo’s product diversification as well above the industry average. The Group’s portfolio includes 18 brands, including leading brands in the sausage and poultry market: Cherkizovo, Petelinka, Kurinoye Tsarstvo, Pava-Pava and Imperiya Vkusa. The product range includes about 500 types of sausages and semi-finished meat products. Poultry and pig farming and meat processing remain the key segments for the Company, as they generated more than 90% of revenues in 2024. The high level of vertical integration (including crop production, feed production, livestock farming, processing and packaging, distribution and retail) and the Group’s ongoing efforts to strengthen it provide significant support to the rating. Through the effective integration of strategic acquisitions, the Company was able to increase production capacity, which contributed to further revenue growth in 2024. In addition, ACRA notes the continuing expansion of such areas as food service (food supplies in the B2B segment) and exports, the revenues of which grew by 28% and 34%, respectively, year-on-year. China, Kazakhstan, and other EAEU countries were the main export destinations for the Company in 2024.
Very high profitability and high assessment of the size of the Company’s business. The Group’s increased self-sufficiency in its own raw materials, against the backdrop of an expansion of the land bank and an increase in the capacity utilization of the oil extraction plant, contributed to achieving 90% self-sufficiency in soybean meal. In addition, the focus on increasing the volumes of sales of products with high added value and a strict cost optimization framework result in a very high profitability. According to ACRA’s calculations, the weighted average FFO margin before net interest payments and taxes for 2022 to 2027 will be 20.7%. As per the Agency’s estimates, the 2022–2027 weighted average FFO before net interest and taxes will be RUB 60.1 bln, which corresponds to a high assessment of business size.
Medium leverage and a high level of interest payment coverage. Due to the increase in borrowings to finance the investment program, as well as taking into account the price pressure in the chicken market, which led to a decrease in profitability, the ratio of total debt to FFO before net interest payments increased to 3.2x in 2024 vs. 2.5x in 2023. ACRA forecasts a gradual decrease in this indicator due to both further growth of FFO before net interest payments (including due to the acquisition of a poultry complex in the Tyumen Region, which will increase broiler production by 60,000 tons) and the restoration of profitability. In the Agency’s opinion, the Company’s debt structure remains stable: a significant part of liabilities is attracted at subsidized rates, and is also well diversified by creditors and repayment terms. Interest coverage is at a high level, which is largely facilitated by the Company’s ability to attract preferential credit products. According to ACRA’s estimates, the weighted average ratio of FFO before net interest payments to interest payments for 2022–2027 will be 5.0x.
High liquidity assessment with continuing capital expenditure pressure on cash flow. The Agency assumes that the weighted average short-term liquidity ratio for 2022–2027 will be 3.6x. Along with a significant volume of available credit lines, this ensures a high assessment of the Company’s liquidity. At the end of 2024, the ratio of capital expenditures to revenues amounted to 14.2% (vs. 14.9% in 2023), which continues to exert moderate pressure on the Group’s cash flows. At the same time, according to ACRA, the Company’s free cash flow (FCF), calculated taking into account dividends paid, will be positive from 2025 to 2027 due to a significant reduction in the investment program in the context of the high cost of borrowed capital.
KEY ASSUMPTIONS
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Average annual revenue growth of 10–20% in 2025–2027;
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Capital expenditures in line with the Company’s business plan;
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Dividend payments in line with the Company’s dividend policy.
potential outlook or rating change factors
The Stable outlook assumes that the rating will highly likely stay unchanged within the 12 to 18-month horizon.
A positive rating action may be prompted by:
- Weighted average ratio of total debt to FFO before net interest payments falling below 2.0x amid the weighted average ratio of FFO before net interest payments to interest payments growing above 8.0x.
A negative rating action may be prompted by:
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Weighted average ratio of total debt to FFO before net interest payments exceeding 3.5x;
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Weighted average ratio of FFO before net interest payments to interest payments falling below 5.0x;
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Weighted average FFO margin before net interest payments and taxes falling below 20%;
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Materialization of biological or climate risks that may negatively impact the Company’s financial risk profile.
RATING COMPONENTS
Standalone creditworthiness assessment (SCA): aa.
Support: none.
ISSUE RATINGS
Bonds of PJSC “Cherkizovo Group”, series BO-001P-05 (RU000A105C28), maturity date: October 23, 2025, issue volume: RUB 10.0 bln — AA(RU).
Bonds of PJSC “Cherkizovo Group”, series BO-001P-08 (RU000A10B420), maturity date: September 10, 2026, issue volume: RUB 10.0 bln — AA(RU).
Bonds of PJSC “Cherkizovo Group”, series BO-002P-01 (RU000A10B4V0), maturity date: March 14, 2027, issue volume: CNY 500 mln — AA(RU).
Rationale. The issues represent senior unsecured debt of Cherkizovo. The holding company of the Group acts as the issuer; the issuance conditions do not include provision of sureties by its operating companies, which indicates the structural subordination of the issues with regard to the debt of the Group’s operating companies. When determining the level of recovery, ACRA also took into account the presence of secured debt. According to the Agency’s calculations, the issues belong to the first recovery category. As a result, in accordance with ACRA’s methodology, the issues’ rating is the same as the credit rating of the Company— AA(RU).
regulatory disclosure
The credit ratings have been assigned to PJSC “Cherkizovo Group” and the bond issues (ISIN RU000A105C28, RU000A10B420, RU000A10B4V0) of PJSC “Cherkizovo Group” under the national scale for the Russian Federation based on the Methodology for Assigning Credit Ratings to Non-Financial Corporations Under the National Scale for the Russian Federation and the Key Concepts Used by the Analytical Credit Rating Agency Within the Scope of Its Rating Activities. The Methodology for Assigning Credit Ratings to Financial Instruments under the National Scale for the Russian Federation was also applied to assign the credit rating to the above issues.
The credit ratings of PJSC “Cherkizovo Group” and the bond issues (ISIN RU000A105C28, RU000A10B420, RU000A10B4V0) of PJSC “Cherkizovo Group” were published by ACRA for the first time on August 31, 2020, October 27, 2022, March 19, 2025, and March 24, 2025, respectively. The credit rating of PJSC “Cherkizovo Group” and its outlook and the credit ratings of the bond issues (ISIN RU000A105C28, RU000A10B420, RU000A10B4V0) of PJSC “Cherkizovo Group” are expected to be revised within one year following the publication date of this press release.
The credit ratings were assigned based on data provided by PJSC “Cherkizovo Group”, information from publicly available sources, and ACRA’s own databases. The credit ratings are solicited and PJSC “Cherkizovo Group” participated in their assignment.
In assigning the credit ratings, ACRA used only information, the quality and reliability of which were, in ACRA’s opinion, appropriate and sufficient to apply the methodologies.
ACRA provided no additional services to PJSC “Cherkizovo Group”. No conflicts of interest were discovered in the course of credit rating assignment.
