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Ros Agro PLC
MOEX:AGRO
Ros Agro PLC
MOEX:AGRO
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[Foreign Language] Ladies and gentlemen, good afternoon. I'm Konstantin and I'm your interpreter.Today's event is going to be interpreted simultaneously. I'm going to advise you now how to proceed in your language of preference. I'm going to say that in both languages, then we switch on the interpretation and you'll be able to talk very free. [Foreign Language] As soon as we switch on the interpretation, a globe icon is going to appear at the bottom of your screen. It isn't there yet, but it is going to show up soon. If you are joining from a mobile device, such as an iPhone or a tablet, the language interpretation option may be hiding under the More menu represented by 3 dots. So please click on the globe icon or tap on 3 dots then choose interpretation and English to proceed in that language. [Foreign Language] Also, please be reminded not to use the loud speaker mode when you're talking. And don't forget to mute when you listen. We're going to start the interpretation now. Start looking for a globe icon or 3 dots and then interpretation at the bottom of your screen.
[Foreign Language] [Operator Instructions] [Interpreted] We are recording this call in both English and Russian and the recording will be available for a few days after the event at the company's website. If you still have further questions, please don't hesitate to reach out to me at [email protected]. Thank you, over to Maxim Basov.
Good afternoon, ladies and gentlemen. Let me take you through the slides. I believe our results have been successful for the third quarter and 9 months. In the third quarter, we had a major surge of the company's revenue that is up to RUB 53 billion, by 45%. The EBITDA is reaching RUB 8.6 billion though, and our net profit is up 3x to hit RUB 17.8 billion. Please be reminded that according to IFRS net income includes revaluation of our crops. Over to Page 5 of the presentation. Let's consider the 9 months performance. Our 9-month revenue is also up by 45% year-on-year as compared to 9 months 2020, now reaching on RUB 157.5 billion, while the company's EBITDA is up by RUB 10 billion to hit plus 50%. 50% the absolute number of RUB 30.7 billion, while the net income has already exceeded RUB 35 billion, which is already on top of the -- last year's net income by 126%. Let's continue to Page 6 of the presentation to analyze the debt profile. The company's net debt remains pretty much on par with its level back in 2020. I'm talking about RUB 69 billion, more or less. In the meantime, we have made quite a good operating cash flow, which has been used up. We spent about RUB 20 billion to pay dividend and another RUB 10 billion to invest as CapEx. You can see that on the following page, the company's operating cash flow is really strong, exceeding RUB 30 billion. And just like I said, we spent it towards dividend and CapEx. Now let me take you through this -- the more detailed situation across our divisions starting with Agriculture, Page 10. The Agriculture division is performing great. Our EBITDA margin in Q3 exceeded 53%, which is higher than the record performance of 2020. In Q3 alone, the Agriculture division's EBITDA exceeded RUB 3.6 billion alone, which represents the fact that Agriculture has made the largest contribution into the group's EBITDA in 2021. Considering 9 months this year, Page 11, we have come very near to the EBITDA number of RUB 9 billion, with 51% of the EBITDA margin. We can expect that -- well, first and foremost, I should say that the 9 months EBITDA is record high across our group's history. And given the fact Q4 expectations are very strong, we could well hit the annual record across our history as well. Let's consider what's happening in the agriculture division, some of the highlights. We are finalizing our harvesting with only corn still remaining in the Far East, while all the other crops have already been harvested. The yields are generally somewhat less than last year. But generally speaking, our performance is great as compared to the average numbers. And also, one should mention the prices. The market environment is quite good price-wise. Domestic wheat prices are on top of the export alternative. Sunflower prices are less this year as compared to last year, given the export duty. However, the pricing levels are still quite comfortable. Sugar prices are comfortable for us as well, which translates into record high net income per hectare. Now let's consider Page 12 of the presentation to discuss our largest division in terms of revenue. That's Oil and Fats. By the way, Oil and Fats is second largest in terms of the annual contribution. Oil and Fats performance in Q3 turned out to be somewhat less than in Q3 2020. The margin is down from 17% to 8%. And the EBITDA is down from RUB 2.9 billion to RUB 2.6 billion. I believe, nonetheless, that the performance was good and the downfall in the margin is explained by the facts that back in 2020's third quarter, our production facilities suspended operations for a while because the feedstock was out. So last year was not particularly good in terms of sunflower harvest crop yield. And on top of that, we had to incur losses in bottled sunflower oil, given the price control agreement that was in place at the time. Further to that, the margins were lower in the consumer segment, because we have effectively failed to transfer the feedstock price over to the customer, although we're still running a profitable business. First and foremost, we are talking about as such feedstock as SolPro [ pen ]. And nonetheless, the business did perform -- well, not as well as the record high year of 2020 and its third quarter in particular, but nonetheless, some very good performance, otherwise. Over to Page 13 to discuss the 9 months for Oil and Fats. Again, we earned more than the record high year of 2020. In this division, we have exceeded RUB 10 billion of EBITDA. Now let's discuss the third largest division, which is Page 14, the Meat segment. As is the case with Oil and Fats, our EBITDA is down from RUB 2.6 billion to RUB 1.9 billion. Let's continue to Page 14 of the presentation to have a look at the prices. You can see that pork prices are still quite high, which is explained by the fact that the [ pouch ] prices, chicken prices were extremely high that comes over from last year given the shortage of pork. So avian flu and the African fever turned out to be the contributing factors. We did not suffer from that. But given the excessive heat of the summertime, the weight gain turned out to be less -- somewhat less than last year. Last year -- last year's third quarter resulted in 76,000 tonnes of production, while this year, it's somewhat less at tonnes 75,000 tons. We're also affected by the COVID-19 pandemic. Our largest production facility in Tambov has failed to ensure labor availability for 100% of capacity utilization. Hence, our capacities were down by about 40%. So we are operating effectively at half the capability. Our consumer sales in the third quarter were loss-making as well, given the fact we have failed to transfer to the shelf price, the increase in pork prices that manifested itself in the wholesale market. Nonetheless, we believe our business has been successful with its margin coming down to 19%. But nonetheless, it remains profitable, and we expect its performance in Q4 to be better than the ones in Q3. The main update here is the fact that wholesale prices for pork have started coming down, and we see production output is growing as well across Russia. Considering the month of October -- sorry, September, pork production went down by 7% in Russia. While the situation has stabilized, in the meantime, our output growing, too. We are also launching our largest investment project in Primorsky tribe, Primorsky territory. We have launched all of the facilities with the exception of one, and we are prepping to launch consumer detailed products and large cuts. Now to the Sugar business, Page 16. Over in Q3, that was the smallest division in terms of the contribution to our total EBITDA across the group. It has contributed RUB 1.6 billion, which is higher than in Q3 2020. And the margin remains at 21%, which is very good, I believe, especially given the fact that we did produce some of the loss-making business in the consumer segment given the price control agreement. And we are currently 1 of the 2 largest suppliers to consumers. And despite that quite significant loss in the consumer segment, the business is still efficient. And it has managed to make a good margin on par with the 1 in Q3 last year. SP1 Given the fact that the price control agreement has expired, and we are processing beetroot of this year's crop, we expect the margin not to come down in Q4 and onwards. All of our 9 production facilities are in operation. So we expect to make more sugar than last year. Over to Page 17. Let's take a look at our key indicators for 9 months 2021. The Sugar business has made slightly more than in 9 months last year, while the margin still remains on par at 24%, which is close to the best ever indicator of 25% margin in this segment. Now this concludes my presentation regarding our results in Q3 and 9 months, and I will be happy to take your questions.
[Foreign Language] [Interpreted] [Operator Instructions]
I'm wondering about the cost side expectation in the following quarter and also in 2022, I'm referring to CapEx, capital expenditure investments. That is okay?
Now if you consider our cash flow, which you can observe on Page 8 of the presentation. You can see that in 9 months, 2021, we have invested RUB 8.9 billion. Our full year's plan suggests about RUB 20 billion around so. Well, it is quite clear we're going to have a lower number. So I think we can invest about RUB 8 billion in the course of Q4. Well, trying to achieve that number, but the timing could be different. Of course, it is going to depend on the situation with the availability of foreign experts and some accounting issues but we expect the total CapEx this year to stand in between RUB 15 billion and RUB 20 billion. Considering our 2022 CapEx, we're working the budget now. The Board of Directors has not approved it yet, and we expect it to happen in 3 to 4 weeks' time. But basically we expect to invest slightly more than RUB 22 billion next year. In 2022, we are not going to have any major investments into the Sugar business. This has had some sufficient CapEx so far. We do have some of the small investments in Agriculture division, mostly, it's about acquisition of equipment and vehicles and also land plots. We will be buying some of the agricultural equipment for beetroot. But most of the investments will be targeted towards Meat and Oil and Fats. Speaking of Meat, that would be around RUB 10 billion, which is related to completion of the Primorie projects and the construction of a new workshop that would produce a thermally treated products for the domestic market and also for the Asian region, given the fact that it's located in Primorie. In the Oil and Fats division, we have quite a few areas to invest CapEx projects that have been launched this year. We're talking about a total number of about RUB 5 billion to expand the Saratov and Amkar Oil and Fats production plants and also the 1 in Balakovo. Finally, we do not exclude quite an exciting transaction, which would enable penetrating into a new region, which would mean some more CapEx and not that much, but still in relation to that M&A.
[Interpreted] Nikolay, you can come up with your question?
[Interpreted] I have 2 questions. One is related to your resolution, Maxim, to step down as the CEO. And then on -- the other question is related to operations. Let me start with the main question. As a shareholder, one of the most important shareholders, what's your involvement after the first of January 2020 and strategic management of the company while the Board of Directors, how active would you like to be him? As a shareholder, whom would you like to see as the new CEO, what are your requirements to that person? Anyone expects that the new candidates, the new CEO, would be expected to have a major contribution strategically and possibly contribute towards the strategic turn of the company.
Well, I'm going to stay on the Board of Directors quite happily. Agro is my largest investment of farm at the present. So I would expect to be involved with the Board of Directors in the most active way as a member. What happens next? Well, I'm very happy with the fact that I have managed to establish a unique and very strong team, I believe. That team has quite the team, very vivid managers. Some of those could well step up as CEO. The eventual decision as to who does so is going to be made in the very near future. I do not have any particular requirements in this sense. And on the Board, I'm just a member. I'm the third largest shareholder at present, I am entitled to have my views, of course. But the main shareholder will definitely have the decisive say when selecting from our great internal candidates who are already employed with the company and ready to step up. That's it. And then I believe we have a perfect strategy, which has been approved very recently, just last week, I had an update for the benefit of the new CEO, whoever that is and also for the benefit of Board members. Our strategy clearly demonstrates that even though we have a significant degree of uncertainty in relation to many factors, such as climate change -- sorry, climate that is the weather, FX, state policy and the global trade. So basically we grow our profits in any scenario except for the most devastating catastrophes. And we are going to grow our revenues as well. So clearly, there is consensus around the strategy on the Board level. The new CEO will take a new look on that, which is quite natural. And we'll listen to whatever that person has to offer to the Board, and we'll be happy if he or she will manage to improve it. That would be great for everyone. A win-win.
[Interpreted] That's clear. And another quick question on your operations. In Q3, we saw the largest fall in your Oil and Fats margin. That is clearly the end of the season for these crops, but still 8% for Q3. How fair a margin would be considered today for the new season, especially given the fact that the crops expected to be record high in sunflower.
[Interpreted] I have always said that 17% is a margin unheard of in the Oil and Fats business. I am unaware whether it has been previously achieved in any geography by any other business. We were helped by the combination of circumstances, of course. First and foremost, I think sunflower oil price went up to $1,900, if I'm not mistaken, per tonne, and the price is down to $1,400 that's $1,470 and the expedite has been introduced. But anyways, 17% was like a gift despite the fact we have been working very hard to save it. I have always believed that the long-term margin for this particular division would be at around 10% plus, I'd say, 10% to 12%. So I believe that's -- that's okay. That was an okay quarter in Q3. The Oil and Fats division is rather complex. It is comprised of three subdivisions. The oil extraction subdivision, the largest one for other profits, suspended its operations in part -- partially, because of the reasons I have already explained. But otherwise, I believe our colleagues managed it really well. In Q4, we are launching the new season. Our facilities are operating at full capacity. We have encountered the fact that supplies of feedstock -- or -- we have just drawings. The sunflower yields are quite high this year. It's record high even, but agricultural producers, as is the case with us, do not rush to sell their produce, because they don't need money. Farmers don't need cash upfront. So medium-sized and smaller businesses, which are abundant in the sunflower market, they don't dominate the market. So they have this thinking of not of converting their produce to cash. I believe the same issue was encountered back in the Russian Empire under the Stolypin government. Russian peasants, they said, would love to have the inventories, because they don't know what to do with cash. They don't know where to keep the money, in which bank. They have already booked their holidays in the Maldives. They have already procured the agricultural equipment. So farmers would rather keep their inventories than cash. We expect the inventories to come to market in September -- sorry, in February. In February, when the farmers would have to prep for the sowing season, and we'll see quite a lot of sunflower seed that is currently inventories. So there will be -- they will need to do something with that and process it somehow. We are confident our capacity utilization will be quite good.And then because of that situation, we launched the processing facilities later than expected. So in Q4, the prices are quite high and the margin in the Oil and Fats division, especially in the oil extraction segment subdivision will not be particularly too high. But generally, the second half of the season will be very successful. We are positive towards this business. Industrial Fats that is a very successful subdivision. We have managed to overcome a well-respected competitor. And we have become the #1 company in oil supply to the HoReCa markets. We have increased our market share in mayonnaise. We are sending full cargoes of train to China with oil. So basically, we believe this division is going to be one of the major growth drivers for the group, as is the case with Agriculture. In agriculture, we mostly drive innovation with better digitalization and stuff like that, while in the Oil and Fats, it's going to be volume ramp-up, maybe new mayonnaise production, more exports, more industrial fats. We are positive about our outlook, but for objective reasons, this business must have or is entitled to the lowest margin as compared to all the other divisions. As we discussed at our previous call, really, we know from our practice and hence translate that into our strategy. We have Agriculture as the #1, then Sugar must be #2, then Meat and only then, in terms of the margin, ranking comes Oil and Fats. But Oil and Fats is the best in terms of growth opportunity, then comes Agriculture, then Meat then Sugar. Thank you.
Leonid, we'd like to take your question now.
[Interpreted] Can you hear me?
[Interpreted] Yes, we can.
[Interpreted] I have a few questions. Your accounts show some money spent to acquire some of the SolPro processing assets. Is that a technical thing? Or is it a real acquisition?
[Interpreted] Question, which particular line are you looking at? Are you talking about the cash flow statement?
Yes, the cash flow.
Okay. SolPro assets, acquisition of SolPro assets. Let me remind you what's going on with the SolPro assets. Ros Agro has already acquired pretty much all of the major assets that it wanted to have. Those were previously owned by companies part of the SolPro Holding. We have already acquired the Saratov oil and fats production, then same history for Balakovo and Atkarsk. What remains grain elevators in Saratov region. And then the land plots also located in Saratov region. All of the other assets have been acquired. That was happening as part of a winding down procedure and bankruptcy auction run by an external administrator. There were many bidders in that auction, and there was a particular price that we arrived at. A company, which is 100% -- or a set of companies, which are 100% subsidiaries of Ros Agro are paying particular price like we paid 14 -- sorry, RUB 11.5 billion for Balakovo, RUB 11 billion [ Volga ] and RUB and 5 billion for the third asset. So that money went from Ros Agro's balance sheet to those subsidiaries. On top of that, Ros Agro is the largest lender to those subsidiaries and most of the moneys has already been received back. So most of the moneys has been received back by Ros Agro as part of its cash flow, albeit by a different line. There is still some dividend remaining, which the administrator is going to distribute to all the creditors, including Ros Agro as soon as that is allowed to happen legally. So in other words my answer to your question, most of the moneys spent on acquisition of SolPro assets has already been received back.
[Interpreted] Okay. As a follow-up to that question, I believe we had discussed that at the last call. Your debt interest is less than financial income. Have you considered or have you had any further discussions to increase the payout given the fact that in the current circumstances, it wouldn't make much sense to pay off the debt given the relative low price of your shares?
[Interpreted] Well, our CFO and the treasury are working very actively. Indeed, thanks to a very reasonable operations of our financial department, we managed to make quite significant money without underwriting any major risks. Please be reminded, we got RUB 2 billion without underwriting the risks. So we're talking -- our portfolio deposits with state and banks mostly and some of the bonds. Bonds by highly -- by companies with high credit ranking. This is a very good financial policy, and we will stick to that in the future. Also, as the Board has decided, well, we have the hedging, of course. But we don't have any open FX position. We only run FX positions in relation to our trade operations. But on the balance sheet side, there is no open cash position. And the increase in rates, which we are observing in the market currently, benefit us given the fact our financial income is growing because of that. In principle, we fully share your take on it. That's exactly what we are doing. As you can see, we are not repaying our debt. Like if we have a 9 months operating cash flow about RUB 30 billion, 3-0, we invested RUB 10 billion out of that is CapEx, and the rest has been paid out as dividend. So our net debt has not changed, as you can observe. It's nearly RUB 70 billion. So in my view, it won't make sense to take it any further down, but boosting it would be wrong as well. Our company is currently operating at its peak performance given very favorable market environment. However, we manage it really conservatively. We manage our balance sheet very conservatively. Just like I said at our previous call, this Board believes that the level of our total debt from 1 to 2x EBITDA is just the right range for us, which is the case now. Some board members believe it would be better to have it down to 1x EBITDA, which means some repayment, but we are probably not going for it. One other point to mention. We always consider potential M&A opportunities. I don't think we'll be able to have anything major before the end of the year, but we could still make something like a couple of small transactions to open up some good opportunities for the future. So we believe the debt of RUB 70 billion is comfortable for us. And as you can see, we, de facto, pay out all of the cash flow in the 9 months.
[Interpreted] Okay. One other question about your financial results. Maybe you have an understanding here. Your net income is much higher than adjusted EBITDA, mostly driven by revaluation of your agricultural assets, if I get it right. So which would be the number, the right number to look at?
[Interpreted] That depends on your models depending on how you analyze it. Well, we have financial income, we have depreciation, we have taxes and we have the revaluation. That's the gap between the EBITDA and the net income. So it's up to you. Historically, it has always been like that. We mostly have agricultural division, like it's going to sell some of its produce in the fourth quarter. So part of our net income would partially translate into EBITDA. We'll still have Q4 pending. Not all the crops have been harvested in Q3, but basically, Agriculture does the harvesting in Q3. We register that as net income. And then whatever was not sold in Q4, will roll over from net income to EBITDA in Q1 and Q2. So in Q3 and Q4, we have the largest net income, because of that effect, historically. Also fully in line with IFRS, we do the revaluation pretty much regularly in Q3. And then if the market is growing, we have higher net income and otherwise, if the market is coming down, our profits is coming down as well. So if you take a look at Q3, the price chart at Page 14. we see prices growing, which boosted the net income. And if we consider October, November and December -- well, at the end of December, we'll see what's happening -- we hardly see the growth. Most likely, the reval would give us a -- downgrade on our meat or pork. But at the same time, we have Primorie project launching. Well, it's up to you. It's up to you how to consider it.
[Interpreted] I have a question. How about your expansion in China? And what's your take on Ros Agro's further expansion in the future? What are your prospects?
[Interpreted] Just to clarify. Are you talking about our expansion abroad or in Russia? The last part of your question.
In Russia and globally, where would you like to expand looking forward?
[Interpreted] Well, it's up to the Board to decide how we move on, as was the case previously. And that will depend on the person, who eventually takes over as the CEO, the first of January. I have always targeted expansion and growth outside Russia. However, the Board has been more conservative as a governing body. I'm not going to give any particular answer in this regard. I am strongly convinced we need to expand internationally. Particularly I'm attracted by Africa, but good opportunities are available elsewhere, like in the Middle East and Middle Asia and also China. In China, we had a few business ideas. The most developed one is about construction of a pork business, a pork farm. But unfortunately, to my regrets, the Board decided otherwise. So this project, albeit somewhat altered, can still be run, although the scale may not be equally large. Quite unfortunately, it's difficult to do business with China currently given their borders are closed. And the political agenda in China is very full domestically -- full of domestic issues. And the -- not only with geopolitical -- not only with domestic issues, but also some of the geopolitical issues and then the COVID and then the inflation, very many issues. So launching or even finalizing negotiations about the pork business in China should our Board decide so, is impossible today. We have taken our team out of China like 18 months ago, and we don't have anyone handling this issue for us there. At the same time, I believe China to be the most attractive exports market for us. We see growth of our deliveries to China, and that is mostly oil, bottled oil, mayonnaise, soybean oil. We are also shipping soybean to China, and we are looking for opportunities to ship corn. As of now, we are prepping for the sales to China. And we hope sugar would follow soon as well. Should China open up the pork market or the sausage market, we'll start shipping those. Generally speaking, our Board -- has been approved by the Board of Directors. So in terms of developing Ros Agro, we have 3 major areas, such as increasing efficiency of the business. And I believe that would come from new technologies or industrialization and digitalization. And then we have Primorie project, which is going to ramp up. We have already started shipping to Primorie. That's the case for as of now. And then another development would be related to M&A. We are still conservative about our outlook in this sector. If we see a good target, we'll do so. Potentially, that is a possibility in the Meat business, in the Agriculture business and Oil and Fats and also in Sugar. We can do that. As for the third growth area. We already discussed that. So I believe it is a possibility. We can do it now. We can invest outside Russia. So I believe these are the main areas. A few more on that. In the Meat business, we can increase efficiency of handling live cattle or we can increase B2C sales. And if you take annualized numbers, we already sell more than 20,000 tonnes of consumer products, and we see good prospects of combined products. And then thermally treated meat exports have good prospects, especially in the Far East and the same is true for them. In the Oil and Fats division, we see great opportunities in exporting our finished produce or expanding production of industrial fats or oils. In Agriculture, we have new technologies as the upside and acquisition of new land and irrigation, which is another interesting development for us. So we're going to handle all of those.
[Interpreted] Maxim. I have a question about your exports. Could you give more insight into your exports numbers in 9 months? How much have they contributed to your revenue? What's the volume of exports per division? And what are the geographies?
[Interpreted] Just a quick -- just a moment. A major shareholder of Ros Agro is selling their -- part of their stock. And we have a presentation for that sale. That presentation is available on our website, and we have the right numbers there. Let me give them out to you. I'm going to read those out. Okay. This is a very detailed presentation, by the way, take notice of it. It has quite a few numbers, especially in relation to our further efforts. Like for exports, it's not for 9 months. It's for the last 12 months starting in September -- oh sorry, that was for 2020, the full year of 2020. Okay. Our exports are record high, 32% of total sales. That represents a significant growth as compared to 2018, let's say, it was only 19%. And later, it's 32%. Our most exporting businesses are Oil and Fats, obviously, since its -- 45% of total sales come from exports. Next, around the sugar division in 2020 with 20% of its sales coming from abroad. Next comes agriculture with 19% of export sales. And finally, Meat with 13% of export sales.
[Interpreted] Entering 2021, can we expect the same numbers more or less so? Is there any growth in particular segment?
[Interpreted] There is always some growth somewhere and there is sometimes a decline elsewhere. But I wouldn't say there is a growth to be expected. I believe we'll see some of the fall, given the fact that production numbers are down across Russia in 2021. The situation is as straightforward as that. We have the domestic market in Russia, and that domestic market is not growing other than niche products. So if we make anything, we make that at a low cash cost if we compare that against global businesses. And if we're allowed to export and generally, we are allowed to export, we would export it. We would export the excess goods, because the domestic market is normally more favorable or at least more convenient. And it's more strategically important for our company. So we only export whatever cannot be sold domestically. So if we see a reduction across the Russian markets and with our company, that means exports would be down as well. While if production is growing, and we see growth in our company, the share of exports would be growing too.
Understood. Then you wanted to treat your pork thermally and export it to Japan, if I'm not mistaken. What's the status of that project? What's happening?
[Interpreted] We are starting designing like as at present, we're designing the technology. We have selected the location, which will be close to our slaughterhouse in Primorie. That would be a workshop to make thermally treated produce. So in the Far East and Siberia and also in Asia, we see most exciting prospects in Japan. For 3 years running. We have been talking to Japanese offtakers. And we're convinced that the success of that project is quite high to be expected. So construction would start next year with completion coming in early 2023. So we hope to sell our goods at the Japanese market. The Japanese market is open in terms of the vet rules as compared to frozen pork and fresh pork as is the case for Vietnam. So our lower cash cost goods with higher quality and good traceability of its geographic origin and also close location to those markets would find its customer.
[Interpreted] Two quick questions, if I may. Considering strategic planning horizon, like when you adopt your strategy, it would last until when? And what about the current strategy? We are currently adopting our strategy for 5 years ahead. Question, that's 2022 through 2026, correct?
[Interpreted] It's 2021. That's business plan plus 5 years. Yes, that's correct. Yes, correct. 2022 through 2026.
So Okay. I have a question about your dividend based calculation. Do you take net income as is in the IFRS accounts? Or do you adjust it by reval, for example?
[Interpreted] No, we don't adjust. We'll take net income as represented in IFRS for the past 6 months.
[Interpreted] Okay. Thank you. Let's divert from verbal questions to those typed in. We have quite a few about your vision on price dynamics for the nearest future, like given the past quarter into the following quarter.
[Interpreted] Well, uncertainty is quite high as always. We need to admit it. So I wouldn't be giving any particular forecast or even guidance, although we do have one internally. I'm going to share some free thoughts of mind with you. So please don't make your investment decisions based on my internal -- my personal forecast. There are quite a few banks, who make money on such forecast. So you may want to read their reports. But basically, here's the situation. So we have quite high global prices like this morning, starting with the Sugar business, it's GBP 20 per raw beetroot. So that has been unseen in the past 7 years. This is related to high oil price expectations, which is probably going to exceed $90 per barrel and some even expect it to go above $100. And also the shortage of beetroot, which is seen, like, for the first time this season across quite a few years, given the high consumption of sugar as of recently. So sugar prices are quite high currently. So it would be around $0.18 to $0.22 in the coming months. Talking about Russia, beetroot sugar production and also molasses would be at around 5.6 million to 5.7 million tonnes. Some uncertainty is present given the fact, not all of the beetroot has been harvested and processed. We will have a better understanding of the situation at the end of December or early January -- mid-January. That means if the government is interested in ensuring market-driven prices and beetroot production in Russia, it would probably allow the market to achieve its balance without the import's duty, maybe. So should this decision be made, as was the case last year, to foster market-driven instruments, then the sugar prices in Russia, well, I really can't give you the price, because I have been instructed by the Federal Antimonopoly Service, not to do so. I can tell you that the price will not be too far from the current level. That's the way to put it, okay? Now let's consider meat. Generally speaking, meat prices, globally, peaked last year and have adjusted to some more medium levels. This happens because of the serious increase in production of pork in China. However, the situation -- the vet situation is quite challenging in China, in Europe, in Ukraine and LatAm. And we see African fever achieving in the United States. So the first instance was registered in the year's. So it's only a question of time when it hits U.S., which is going to be a major, major hit. However, shocks aside, the pork prices are going to come down somewhat. That's globally. In Russia, a lot is going to depend on the ruble. The global price at RUB 65 per dollar is 1 thing and the same price at RUB 75 per dollar is a different thing.However, we expect production to recover in Russia, that is true for pork and also chicken. So pork is going to really hit. 4 major businesses are expected to increase their production. We expected them to do so this year. But given the fact that African swine fever has had an impact in the size of 200,000 tonnes in total globally, the market took that hit. So it's difficult to forecast, really, what's going to happen. Quite a lot of production facilities have been built. Russia pork prices are expected to come down and early signs would be seen in early months of 2022, especially in view of the great fasting of Easter. But thank god, we still have Vietnam, Belarus and Ukraine open and we still -- we are currently exporting our production to those markets quite successfully. So that's it with Oils and Fats. Oil is currently at one of the highest levels. So in 6 months to come, palm oil would remain still high. That is related to the potential flooding and also a shortage of labor available in Asia and Malaysia and also in the Philippines, because of the COVID.So the price is going to be quite high. At the same time, confectionery demand is quite good. Sunflower oil, well, given the fact the supply side is expected to be high, so the price is down. Last year, it was record high, and the sunflower oil premium to palm oil was record high. Now it's not the case. The premium has come down, but demand is expected to recover in China and India. So basically, the price would remain flat at where it stands currently, that's $1,800 to $1,500 per tonne of sunflower oil. It's not that relevant for us as a business, because of the export duty that eats up, like, 70% of the revenue, like $1,050 per tonne. So the price in rubles is going to be quite sustainable, varying, depending on the FX to -- of the ruble to the dollar. And finally, grain. It's quite high. Corn is at record-high in 9 years. Soybean has adjusted and now growing again. In the coming 6 months, I would expect the current level with maybe slight adjustments, but that's a matter of speculation. Speculation in particular situations in different countries. In Russia, where 70% of our exports revenues are taken by the government on top of the particular threshold. So the average price is going to be at a comfortable level. In terms of Agriculture, the key question is whether farmers would be able to buy fertilizers and at what prices? Like, our company has only managed to procure 10% maybe 15% of nitrogen and phosphate-based fertilizers, because they simply refuse to sell. But I still expect we'll manage. The question is how much and at what price, and that has -- would have a major effect on the yields next year. Failing to apply the fertilizers would result in lower crops and higher prices. The government is on it. I'm sure a solution will be found that would allow Russian -- farmers would be able to buy complex fertilizers and nitrogen-based fertilizers.
[Interpreted] Thank you. I would like to thank all of the participants. We are limited in time, so we cannot take any further questions, but I will be happy to answer those if you reach out to me at my phone or IR, [ [email protected] ]. Thank you to everyone for taking part, and goodbye. [Portions of this transcript that are marked [interpreted] were spoken by an interpreter present on the live call.]