CEO: Rusagro cuts 2019 capex forecast to less than 18 bln rbl

MOSCOW, Nov 20 (PRIME) -- Russian agricultural holding Rusagro has reduced its 2019 capital expenditures guidance to less than 18 billion rubles from more than 20 billion rubles, CEO Maxim Basov said in a conference call late on Tuesday.

“We are actually cutting capital expenditures, and it is our response to the current situation…Our initial forecast for capex this year stood at more than 20 billion rubles, but now I think that we will invest less than 18 billion rubles,” he said.

The investment program in the sugar business is almost finished, and the company plans no new large projects in the sector. The company plans to finish construction of a pig farm in the Tambov Region, and will invest a small amount of money in January–March 2020. Currently, the company is drafting its budget, revising some strategic prerequisites, and may reduce capital expenditures for the next year, he said.

“Our response to the current situation is to cut capex in order to maintain dividends and the dividend policy,” Basov said.

The company plans to produce about 1 million tonnes of sugar this year. Favorable weather conditions resulted in a high yield of sugar beetroot with a high content of sugar, which may translate in an all-time Russia’s record 7 million tonnes. As a result, the sugar sector suffers a crisis as the market is oversaturated and the prices are too low, he said.

Rusagro is also in negotiations with Chinese companies to increase production of pork in the Far East to 1 million tonnes, but it will be done only if China opens its market for Russian pork, he said.

“We can build additional capacities in the Far East fast, although no more than 40,000 tonnes, and about 40,000 tonnes more in the Tambov Region. We may raise pork capacities even more, but only if we are in a partnership with Chinese companies, especially in the Far East,” Basov said.

(63.7730 rubles – U.S. $1)

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