Losses at Bashkirskaya Poultry Farm Increased 13-Fold in Year of Bird Flu Outbreak

The company's revenue in 2023 amounted to RUB 2.6 billion, a decrease of 32% compared to 2022.

JSC Bashkirskaya Poultry Farm received a net loss of RUB 735 million in 2023. This is 13.4 times more than in 2022, when the company reported a loss of RUB 55 million, according to the company's financial statements, which were examined by RBC Ufa.

In 2020 and 2021, the poultry farm received a net profit of RUB 7.2 million and RUB 521 million, respectively. The company received its previous maximum loss over the past decade in 2018 - RUB 398 million.

The company's revenue in 2023 amounted to RUB 2.6 billion, a decrease of 32% compared to 2022. Cost of sales decreased by 42%, to RUB 2 billion. Sales profit increased by 108%, to RUB 256 million. The company's accounts receivable decreased by 52% over the year, to RUB 187 million, accounts payable decreased by 58%, to RUB 118 million. Non-current assets increased by 6%, to RUB 932 million, current assets decreased by 65%, to RUB 387 million. The company's capital and reserves decreased by 63%, to RUB 439 million.

In the notes to the financial statements, the company notes that the main industry risks of the poultry farm are associated with a possible deterioration in the situation in agriculture as a whole.

"Among the main key factors influencing a change in the situation for the worse, the most significant are: the incidence of bird flu, which occurred at JSC Bashkirskaya Poultry Farm in August 2023; an increase in feed prices; an increase in energy prices," the document says.

it is also noted that the SVO and sanctions of Western countries do not lead to a reduction in the activities of the poultry farm and do not significantly affect the ability to continue working.

Managing Partner of IPM Consulting Anastasia Vladimirova noted that outbreaks of bird flu for the industry are significant risks, since enterprises that produce critically important products for the economy and agricultural sector of a particular region in regular demand suffer.

"Return to profitability of production after downtime and recovery depend on a large number of factors: availability of own funds, cost of energy resources, veterinary drugs, feed, etc. An aggravating circumstance is a dispute with the government of the Republic of Belarus, but given the status of the enterprise and its de facto strategic role, bringing the company to bankruptcy even with such indicators of capital adequacy and loss is the worst possible option. The poultry farm has experience of previous years of unprofitability, and given that the production potential has not been realized at full capacity, with the proper level of interest of the key shareholder, bringing the enterprise out of the crisis is possible by attracting additional credit lines and creating favorable conditions for increasing production," the expert says.

According to Anastasia Vladimirova, the enterprise can cope with the crisis in the next two to three years, however, given that the risks of new flu outbreaks remain, it is necessary to include negative scenarios in the financial model, which is fraught with additional expenses for shareholders.

As reported by RBC Ufa, due to an outbreak of bird flu, 3.2 million birds, 18.2 million eggs and 70 tons of MEAT and meat products were destroyed at the enterprise. The share of destroyed livestock was 25% of the total poultry population in Bashkiria. In March, the poultry farm filed a lawsuit against the regional government; the company is trying to challenge the refusal of the State Veterinary Committee of the Republic of Bashkiria to pay it compensation for the destroyed livestock in the amount of 700 million rubles. Earlier, the Ministry of Agriculture of Bashkiria reported that in 2024 the poultry farm plans to produce 100 million eggs, the total production volume allows for the production of 800 million, the enterprise will reach full capacity in 2025.

JSC Bashkirskaya Poultry Farm is the largest poultry farm in the region. At the end of 2022, the Tavros agroholding closed a deal to purchase a poultry farm from the Mikhailovsky agro-industrial complex, part of the Cherkizovo group. The value of the asset was estimated at 2 billion rubles.