© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
[Foreign Language] Ladies and gentlemen, good day. I'm Konstantin, and I'm your interpreter. This event is going to be simultaneously interpreted, and I'm now going to advise you how to proceed in your language of preference. I'll do that in both languages, then we'll switch on the interpretation. And you'll be able to talk barrier free. [Foreign Language] As soon as we switch on the interpretation, a globe icon will appear at the bottom of your screen. If you are joining from a mobile device such as a smartphone or a tablet, the language interpretation option will be hiding under the more media represented by 3 dots. You'll need to click on the globe icon or tap on 3 dots, then go interpretation and choose English. [Foreign Language] Unless you have any questions on the technical matters, we're switching on simultaneously interpretation mode.
[Foreign Language] [Interpreted] [indiscernible] who is Head of Reporting Controlling and Investment. After the presentation, you'll be able to ask questions. [Operator Instructions] Please be reminded that we're not going to publish a recording of this call. At this point, over to Alexander for his presentation, please.
[Interpreted] Good afternoon, everyone. I hope you can hear me well enough. Let's proceed with the presentation. I suggest that we proceed with Page 7. That's the first major element and I'm going to disclose the results of Q4. So in Q4, our net revenue stood at RUB 58.2 billion, which is 11% or RUB 7.2 billion is less than the same quarter in 2021. The net revenue has moved down across all segments with the exception of Meat, which is up mostly thanks to the launch of our Primorie project. The company's EBITDA margin moved down by 10 percentage points to hit 17%. You can see in the bottom right-hand chart that it is down across all segments with the exception of Oil and Fats, which enjoyed significant prices while the cash costs remained low. The EBITDA in absolute terms stood at RUB 36 billion in Q4 2022. So the net income stood at RUB 5.4 billion, which is on par with the previous year.
Next page, please. Here, you can observe our 12 months' results. In 12 months 2022, the company demonstrated an increase in its net revenue. Our revenue was a record high RUB 240 billion, which is plus 8% or plus RUB 17.3 billion as compared to 2021, 12 months. This isn't showed by higher sales volumes in Sugar and Meat divisions as well as favorable pricing environment in Sugar and Oil and Fats divisions.
With the launch of Primorie projects and [indiscernible] was a favorable factor for our net revenue last year. Adjusted EBITDA in 12 months 2022 was down by 6 percentage points -- was down by 6%, excuse me, to hit RUB 45 billion with the adjusted EBITDA margin of 19%. The net profit stood at RUB 6.8 billion, mostly driven by revaluation of biological assets and FX movements due to the blocking of balances and accounts at certain parts of the year.
Next page, please. This page explains the company's debt profile as of 31st December 2022. Our net debt stood at RUB 97.7 billion (sic) [ 99.7 ] with the net debt-to-EBITDA ratio growing from 1.5 to 2.2. The major driver here as explained in the following factors -- in the following pages, but mainly talking about FX movements, which we discussed at length at the previous calls as well as the cost we had incurred in our working capital in 2022 and that's pretty much it. The major drivers behind our net debt position as to the gross debt up by RUB 60.7 billion as short-term loans were up in order to extend additional loans that we had previously subsidized by the government under decree [ 1812 ].
The following page, #10 explains the company's finance income and expense. As you can observe from the table, in 12 months 2021, we had a net income, whereas in 2022, we had an expense of RUB 10.2 billion. This is mostly driven by the FX movements as well as reduction of net interest income because a portion of the balances, part of the money we had were not put in deposits because of being blocked.
Page 11 now explains the company's financial position in terms of the balance sheet. Just a few words about it, starting with assets mostly. Cash and cash equivalents as well as investments increased by RUB 45.6 billion. We are going to see more details on that on the following page of the presentation. As you can observe, we also observed an increase in receivables and prepayments, which are up by RUB 19.6 billion. This is due to the growth of trade receivable balances in the amount of nearly RUB 12 billion, which is, in turn, mostly connected with export sales in Agriculture and Oil and Fats segments.
Another major driver is prepayments, which increased mainly in the Agricultural segment because of the need to prepay for fertilizers. And the same went up in Oil and Fats, increased due to the need to prepay raw materials such as sunflower seeds. Let's continue to Page 12 because the only liability on the rise is loans, which I have just commented on. Now let's continue to Page 12 to discuss the company's cash flows. As we can see here, well, just a few comments. We had a positive cash flow from operations, but that was partially offset by FX movements on our balances and also capital expenditures. So the net cash flow from operations from trading activities was also affected by the increase in working capital, which I have just commented on because of the receivables and biological assets reevaluation.
Now, I'm not going to delve on that any further. We see an increase of exports, hence increase in receivables and also prepayments. CapEx stood at RUB 12 billion as they can see in the pie charts, which is about 13% less than in 2021.
Now I suggest that we have a quick run with results of each segment individually. Speaking of Q4 separately and the full year of 2022 separately, let's start with the Sugar segment. In Q4 2022, our Sugar business demonstrated a slight reduction in its revenue by only 3%. This is mostly explained by the shift in sales into the first half of 2023. And this -- speaking of pulp mainly, and this has affected our EBITDA developments in Q4.
Proceeding to Page 15 to discuss the Sugar segment indicators for 12 months 2022. Considering the full year performance, our Sugar business is one of the key contributors to Rusagro Group's overall performance. We have seen a significant increase in revenues, mostly due to the increase in sales volumes, thanks to positive market dynamics. As a result, the sales were up by 36% to reach nearly RUB 15 billion in total. More than that, the adjusted EBITDA margin is up from 25% to 32%. This comes thanks to favorable pricing environment on the one hand. While on the other hand, due to the fact that the cash cost was lower, and we incurred a lower cash cost as compared to the current pricing environment.
Moving over to Page 16, let's discuss the Oil and Fats indicators for Q4 2022. The sales remained pretty much flat year-on-year as compared to the fourth quarter of 2021, was RUB 31 billion in absolute terms. The adjusted EBITDA margin is significantly up. The EBITDA in total stood at RUB 5.2 billion and EBITDA margin reached 17%, moving up from 9%. This is due to the pricing developments in sunflower oil and to the fact that the import duty was discontinued in Q4.
Now let's consider the full year for Oil and Fats segment. As is the case with the Sugar segment, we can say pretty much the same. It's one of the key contributors into the group's overall performance, both in terms of sales and also EBITDA. The sales are up by 6% or RUB 133 billion in total sales across 12 months, thanks to favorable pricing environment in Oil and Fats. The adjusted EBITDA margin is up by 2 percentage points, coupled with high total revenue, our EBITDA is nearly at RUB 16 billion. Thanks to the Fats, some progress comes from the previous seasons, which had lower prices. The cash cost was low again and EBITDA is further up by 25 percentage points year-on-year.
Now the Meats division -- the Meat segment, starting with Q4. We can say that the Meat segment demonstrated the following performance in Q4 2022. We see an increase in sales and in the fourth quarter, well, we need to comment that in parallel with 12 months. Now in Q4, the sales were up by 7% or RUB 740 million. While at the same time, there was a negative pressure on the cash cost and not full utilization in Primorsky Krai. We didn't make a significant margin with only 5% of the adjusted EBITDA margin of RUB 612 million. Despite the fact that the cost started coming down, the full effect is expected to be held in 2023 already.
Now the same segment, Meat with its indicators across the year. In 2022, the sales increased to hit nearly RUB 44 billion, while the adjusted EBITDA margin is down. The adjusted EBITDA is RUB 1.6 billion, which is much less than in the previous year. The 2 drivers here include the launch of Primorie, Primorsky Krai, which is still ramping up. But in 2022, it did not perform as we had expected in our -- which we expect in our target business model. And the other driver is high fodder cost, pretty much across the [indiscernible]. Now we continue to Page 20, Agriculture. I believe the main development here affecting the group's performance in Q4 2022 and also across the full year of 2022 is the following. In the fourth quarter, as you can observe, our sales stood at RUB 14.87 billion, which is significantly less than in the fourth quarter of the previous year, while the EBITDA of our Agriculture segment stood at RUB 3 billion or with the margin of 20%. The key driver here [indiscernible] decided to move or shift sales from Q4 2021 into -- from Q4 2022 into 2023.
And we expect that our performance in the agriculture segment in 2023 will be reflected in the coming quarter. And another important driver, which I mentioned is the trading operations that we -- trading activities that we launched, which had a positive effect on agriculture product sales.
Speaking overall, I can tell you about the profitability here in Q4 and generally in the second half of the year was under pressure from the global wheat markets and negative weather conditions, which has resulted in the shift of sales across various cultures. Let me continue with Page 21 to discuss the agriculture segment where the key indicators across the year. Revenue stood at RUB 32 billion as compared to RUB 42 billion in the previous year. Soybean and sunflower decreased sales volume of soybean and sunflower resulted by sales volume transfer to the beginning of 2023 in order to improve sales margins. And also, there was a negative effect due to the adverse weather conditions, which were challenging indeed in 2022, fourth quarter, which is an impact.
Wheat is under rise, thanks to the trading activities, just like I said previously. Our adjusted EBITDA is down by 58% to RUB 9.8 billion, while the adjusted EBITDA margin is down to 30%. The drivers remain pretty much the same. On top of that, we saw an increase in costs of services such as outsourced services or transportation services, which have affected the agriculture segment in 2022.
I believe this concludes my presentation at this point. So we're happy to take your questions.
[Interpreted] Thank you very much for this presentation, Alexander. [Operator Instructions] The first question comes from Mr. Nikolay Kovalev.
[Interpreted] Can you hear me?
[Interpreted] Yes, we can. Please go ahead. And can you please introduce yourselves and the fund you're representing?
[Interpreted] Nikolay Kovalev, VTB Capital. I would like to ask two questions, if I may, one relates to [indiscernible] operations, and the other one to its corporate structure. We have observed some very positive margins in the Oil and Fat segment across the fourth quarter of 2022. This is the medium for the agricultural season in Oil and Fats. So would we expect the margin of 17% to be repeated, further until the next harvest, especially considering the fact it's record-high harvest for sunflower? Do you understand your procurement terms and the pricing, which have stabilized? That's my first question.
And the second question on your corporate structure. You have observed a number of updates as to what you'd like to change in the corporate structure, may be moving to another country? So can you update us as to where you stand here. Yes. Thank you.
[Interpreted] Thank you, Nikolay. Thank you for your question. Considering the company's performance in Oil and Fat segment, well, frankly speaking, it would be a speculation now to discuss further movements of our margins. I can give you an insight into the drivers that could potentially change the situation, starting with the following . Well, it's the seller's market at this point. It's because Russia is facing shortage of sunflower in general, but we have [ RUB 1 million ] in balances, balances move over from the previous year and where it's a record-high of harvest. So agricultural producers do not want to sell early in the season at unfavorable prices because that would -- because of that, we are going to see a significant amount.
Moving over to the next season. That's how the market performs. This overhang in the market is supposed to exert pressure on the pricing environment by affecting the margins. But this may not happen because of other drivers affecting the market. Those driver is the FX. Foreign exchange rates, which would most probably move the margin up. And the other driver is demand given the situation in Turkey, and Turkey used to be a major hub consuming about 1 million tonnes of sunflower oil and about half of that was further exported to Syria, Iraq and other countries.
So that chain has been broken. On top of that, the market has a lot of sunflower oil coming from Ukraine. So this combination of factors may result not in the way that we are hoping for or you maybe hoping for when considering our margins. So time will tell. That's all I can say at this point.
But basically, basically with quite a lot of sunflower remaining with agricultural producers, with everything else equal, I believe this would -- some good results that would show some good margins for the business. But it may turn out to be different [indiscernible] . Speaking of the corporate developments, can you please be more specific on your question? What's your concern? I don't think I'll be able to give you a generalized answer. But if you are more specific in a question, then I will be able to comment.
[Interpreted] Well, just in terms of market feedback, analysts [indiscernible] hearing that Rusagro has some good performance, but it's -- the company is not paying dividends. So marketplaces believe that [indiscernible] makes it really challenging to pay dividends. So maybe there are other types of operations that could be established in a different country. Maybe you can move from Cyprus to Russia so that these limitations do not have such an adverse effect on your equity story so that in the future, you'll be able to pay dividends.
[Interpreted] I understand your question. Thank you. If you're asking about the dividends, then yes. The Russian shareholders are currently limited in their rights because of the national depository. So I am not talking only about dividend rights, but also voting rights. And basically, we are trying to achieve the [ volume ]. Given further clarifications obtained at the end of the previous year, we are waiting to receive a license from the regulator to recover the rights of our stakeholders.
And secondly, if we fail to obtain that license, we will be looking, and actually are looking for relocation options, we could relocate to Russia. Any specific moves to that effect are being finalized. It's mature enough. The plan is mature enough, but it's not mature enough to disclose to investors on the call.
On top of that, we have an issue with foreign shareholders who are also infringed with their rights, considering the fact they hold a security that they can sell in [ OTC ] transactions, but they can't enjoy the market listing and market valuation. So it's an important objective for Rusagro. We want to recover our GDR listing with a foreign exchange of sort. So I would expect some positive news in March.
[Interpreted] And our next question is coming from Alexey Krivoshapko.
[Interpreted] Thank you, colleagues and thank you for this call and your detailed explanations. Could you please comment on the Meat and Pork specifically given the relatively very low prices in Russia. What export opportunities do you currently enjoy? Are there any markets where you could potentially sell the pork at more favorable prices?
[Interpreted] Alexey, that's an exciting question for an investor, isn't it? Alexey, generally speaking, you're quite right that pork prices in Russia are pretty below. One reason for that is the fact that fodder comes cheaper in Russia. That's one reason. And secondly, Russia has an overproduction -- Russia is in a situation where production of pork, which has market pricing pressure. That's a relatively complex model.
But generally, the market finds its balance with pork replacing some other products. Well, in theory, that's how it is [indiscernible] but no, why? Because with the current FX between the ruble and the dollar, only very few -- I understand you have the expertise. So you know that we are only open for Vietnam, but as the ruble gets stronger, that will be the main exports direction -- main exports geography.
So all imported products targeted towards that market at about RUB 90 per dollar will be back as the situation -- or maybe earlier than expected because the fodder is really cheap. Okay, so only Vietnam is open to make it very simple. Considering global countries, we have significant amount of consumption. Yes, it's only Vietnam.
[Interpreted] Yes, okay, that's understood. And then another question, if I may. Do you have a sort of CapEx plan for 2023, anything approved? How much do you intend to invest and what kind of projects are you targeting?
[Interpreted] Yes. We have a plan about RUB 15 billion, pretty much [ RUB 13 billion ] or maybe something in part of the previous year. We have some CapEx to invest into our project in Primorsky Krai, which will be the final portion of CapEx there. But generally, we expect something on par with the previous year. It's the construction of our Balakovo site having overcome political difficulties there. So we're just looking for the best timing to go ahead with that.
And I'm referring here to Nikolay's question. We'll see what happens with our margins. If it's good, then we may push it down. If the margins are not as promising, then we have launched the reconstruction as of the 15th of May. We are also procuring equipment for [indiscernible] reconstruction and finalizing the design phase currently. And then there are a number of potent supporting CapEx projects in Agriculture and also Oil and Fats, of course.
[Interpreted] And then a quick follow-up to my questions, if I may. Considering the FX like RUB 11.5 billion, but in the cash flow statement, RUB 13 billion, but it's a noncash item. Obviously, can you explain what was blocked and then unblocked, how did it develop? How did it evolve? Please comment.
[Interpreted] Yes, let me comment. There is no contradiction between the 2 numbers. One is the P&L number. The other one is the cash flow number. And the thing is it's the same number, albeit in dollars. And in rubles, it's calculated with the different FX. So most of the blocked amounts have been unblocked, but we still have -- and we disclosed it in our financials, we have about -- that's ruble equivalent of about RUB 4.7 billion that's still blocked. We are actively involved in sorting that out, and we're expecting a positive result in the months to come.
And again, a quick word on how this is [indiscernible]. Well, every investor understands the geopolitical news starting back in February last year. So we increased our FX position to ensure we have enough foreign currency to pay our costs in 2023. I am talking about feedstocks such as [indiscernible] as well as CapEx. We had that at a particular FX rate. Then as the rebuild got stronger, we have failed to move over to the ruble. Because at a certain point in time, when the money was built up, our former main shareholder go sanctions imposed against them. Then a lot of suspicion followed towards Russian shareholders in general. So the major portion of the blocked amounts has been unlocked. We carry on with that effort and expect to finish in Q1. I think everything will be unblocked with the exception of Credit Suisse, but we do not disclose any details of that, but the amount is insignificant with them.
[Interpreted] And one final question, if I may. Don't really follow that in real time in terms of how all sorts of government decrees, innovations with exports or import duties. How all of that develops? Could you make a quick reminder what has been going on across your segments? I have missed one on sunflower oil. Just a quick reminder, if I may. How you developed and what kind of limitations you face? What eased up -- removed in 2022.
[Interpreted] Well, I don't think I can have a quick reminder for you. Maybe we can discuss that separately. It's a very big question, very broad question, if I may. I will drop in an update. I will share that with you.
[Interpreted] Thank you. I hope you can hear me well enough. So thank you for this opportunity to ask a question. [indiscernible]. Svetlana, I have 2 questions, if I may. One is mostly operational and the other one is more on general corporate matters. As a rule, analysts ask this question to the top management as to what their expectations are in terms of pricing and volumes for the upcoming year. I hear now that there is positive news about potential less of a pressure, reduction in pressure on the Meat segment because fodder is becoming cheap. So we can expect at least the same margins in the upcoming quarters?
And also you have already commented on the Oil and Fats divisions. Can we touch upon some expectations there in sales prices and also operating cost spends for Sugar and Agriculture? Just for us to have a basic idea as to what's the next quarter may have added for you?
My other question relates to your dividends. Last year, the company announced the second tranche for 2021 -- to the second tranche of dividends, and then withdraw that or recorded. How likely is it that you may revert to paying that amount maybe on top of the 2022 dividends in the upcoming future.
[Interpreted] Yes, let me handle those questions. I don't quite understand to what degree I can go into detail. Okay. I'll answer the first one. You answer the second one. I think it's only Agriculture and Sugar. Well, interestingly now, Rusagro is a well-established company. Once the agricultural prices come down, it's not good for our Agriculture segment. It's good for Meat and the same is true for Oil and Fats. We're resilient to any fluctuations for any prices. But nevertheless, sugar. Well, there was no excessive production of the sugar offering on the Russian domestic market. There is slightly positive balance. It's not that tight with exports to Kazakhstan, which means Russia has enough sugar for its own use and also the neighboring country of Kazakhstan.
With the current sugar prices, we do not expect the price to be lower. Well, we believe that the price today is close to its fair level. There is always a possibility of price surges as you know, all halves in Soviet background, right? Whenever something happens, people start buying sugar in buckets. And that would result in a collapse of the retail chain with speculative dealers skyrocketing their price offering. But at the same time, we believe that the price scenario is well balanced. And we believe that the price is very comfortable for agricultural producers, the farmers as well, given the formula and that is in place.
So we want to ensure that [indiscernible] given the fact that it has most of the cash cost, it must offer a payback that goes from producers to harvester. That must be one of the top margin products.
So on the Sugar side, we believe that range to be within all around the current pricing value was up or down movement of 10% to 15%. Well, I can tell you for sure that the current wheat duty will not allow the price of wheat to fluctuate too much because the current formula rates in such a way so as to cut off any surpluses in the dollar price or the ruble price depending on the FX movements. So we believe that this year's wheat prices would be flat, maybe slightly down than flat, but -- and it's highly unlikely to move out of that arrangement, especially considering the fact Russia had a record high harvester wheat. All other crops have a different duty arrangements. And I don't think it's our job to forecast the fluctuations here on the FX side. It's up to your analysts. You are much more professional.
So it's our question to you rather than the other way. Considering the global prices, well, I believe that's the global agricultural produce prices remain at relatively high levels. And you can only expect as said if there is any significant turmoil in the markets, but otherwise, that could be flat.
[Interpreted] Thanks a lot for your comments. Now if I may, let me remind you of my question on the dividends.
[Interpreted] The dividend. Frankly, I wanted to have a quick answer about restoring investor rights. That's our primary focus now. And as soon as we move ahead, then we'll establish our position on the dividends. But obviously, our strategic objective is to recover dividend payout, which was the case before everything was blocked. Yes, that's our objective [indiscernible]. Well, it's just that if we pay the dividends now in ruble, they won't be able to get it.
[Interpreted] Then I would like to give the floor to [indiscernible]. He's a Director -- Investment Director at [indiscernible]. [ Maxim ], please correct me if I am wrong with your title.
[Foreign Language] [Interpreted] You're quite right. Can you hear me well enough?
[Interpreted] Everything is loud and clear.
[Interpreted] Good afternoon, colleagues. Reverting to the Meat segment of your operations, I would like to ask you this. Primorsky Krai facility is operating at [indiscernible] capacity now. Does it fully target the domestic market? Or is it something exported? That's my first question.
And my other question is about Vietnam. What are the volumes as recently may be -- what have been the volumes targeted towards that end in the recent months. And is there a possibility to re-export, let's say, from Vietnam to China?
[Interpreted] Thank you for your questions, [ Maxim ]. Very professional and very good one specifically talking on the Primorsky Krai capacity. Primorsky Krai facility is still ramping up to full design capacity, and we are expecting to hit the design capacity next year and maybe further towards the -- by the end of 2022, we got the [indiscernible], which allows us to do exports, but again, we'll not be exporting too much. I have commented on that already. The current FX rate does not enable us to do any mass exports even to Vietnam, just a few districts. It's just a few insignificant volumes to Vietnam, but we're clearly observing a very exciting process now in Primorie. Sometimes, we cannot sell the meat locally. Although in kilograms and tonnes by calculation, it's supposed to be selling them. The thing is Primorie does not consider that a pig consisted of one of the particular. The thing is they focus on particular parts of a pig and they use frozen meat. Just that, they don't see the value. We need to be trained, awareness needs to be raised, that food is better than frosted or frozen meat because of their freshness, because of the useful elements that remain in the meat. And then we'll need to pay major industrial uptake in Primorsky Krai that they can focus not only on the traditional parts of the pig, but also other elements that they have traditionally only failed to import -- order previously. So the situation today is such that parts of meat from Primorsky Krai is shipped to the West and it comes all right to Siberia.
Okay. Now the volumes. It's about 70% for 2023 of the total design capacity. 2023 is [ 70% ] of the design capacity. As you hear, 2024 will see the full design compassed finally reached.
[Interpreted] Okay. And Vietnam, if I may, the exports.
[Interpreted] No, no, no, that's impossible. The thing is, by regulations, very strict. So it's strictly banned. You can't export from one country to another by rebranding the country of origin -- simple banned. No, you cannot do that.
[Interpreted] Okay. And one final question today is coming from Marat Ibragimov.
[Interpreted] Good afternoon. Gazprombank, Marat Ibragimov speaking. You can hear me, right? On the trading activities, I understand that in your business for you, what's your competitive advantage? And what's your target EBITDA margin in this segment. You have clearly some storage capacities and exports contracts, but otherwise, this business is mostly export-oriented. Is this correct?
[Interpreted] Okay. I will start with our trading activities, competitive advantages as we have a range of resources and sort of natural hedge. We have the need to sell everyone produce. That's one thing. Secondly, we are favorably located across to Volga. And we have some logistical advantages. We can reach a number of countries and Caspian region and further beyond it. That's one thing, and that's another thing. And yet another thing is our customers' world. Can we trade. They consume not only pulp or oil. They also need soybeans to buy these. If you didn't offer these services to them and now we do.
And then we have the infrastructure -- well-established infrastructure with the ports, terminals, vessel owners, financial institutions, insurance companies which we can ramp up and extend or expand to increase the turnover in cargo by offering more produce. The margins in trading activities are not as high, but it's not about the percentage-wise margins, but in absolute terms, considered against the backdrop of the [indiscernible] volumes.
[Interpreted] Okay. That's understood. And on the Meat segment. You have mentioned that the consolidated margin segment is down because of the Primorsky Krai project, which hasn't reached full capacities yet. Now if you can share it, what is the operating margin or is it a loss on the Primorsky Krai project and the EBITDA side?
[Interpreted] We do not disclose these details, unfortunately. Well, the EBITDA is positive, however, there is no loss. And most of the decrease in our Meat segment comes not through the Meat segment, comes not through the Primorsky Krai project, but rather the pricing environment in bulk in the first 6 months and given a certain time line. Well, over production crisis in pork will be exerting pressure on the prices in the upcoming 2 or 3 years in general.
Now what happens with the market. Well, in effective balance, once the variable costs hit the prices, they will simply withdraw from the market and the market will reestablish the balance at a new point, which will enable at least something. So generally speaking, in fundamental terms, the market has delays, the troubled turmoil of inefficient farmers were in loss and out of the business. So we expected this to happen en masse this year, and now we are shifting that forecast to next year.
But basically -- basically, there is nothing good in the midterm to be expected in this market up until the point in time the market has cleared up excessive offering. But this year is expected to be quite good if the fodder prices remain at current levels.
[Interpreted] At this point, we seem to be out of questions in the Q&A session. I'd like to thank all participants for joining this call for your participation and for your questions. Should you have any further questions, please don't hesitate to send them to IR at rusagrogroup.ru and I'll be happy to answer them. And Rusagro is happy to congratulate our leaders for the upcoming International Day of Women on the eighth of March of some spring mood [indiscernible] and I hope this relates to me as well. Thank you again, and goodbye.
[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]