Cherkizovo: H1 profit doubles, but dividend yield still below fair level

On August 26, Cherkizovo released its H1 2026 results: revenue rose 3.5% to RUB 141.6 billion, EBITDA increased 23.5% to RUB 31.4 billion, and net profit more than doubled to RUB 14.1 billion. In this review, we examine what drove the margin expansion, how debt changed, and what it means for dividends.

Key takeaways

— EBITDA margin expanded to 22.2% from 18.6% a year earlier, driven by higher meat prices and lower cost of sales

— Net profit doubled on the back of higher operating profit and lower interest expenses

— Net debt decreased by RUB 10.3 billion over 12 months, but Net Debt/EBITDA remains at 1.91

— Capex increased to RUB 9.6 billion in H1, but operating cash flow covers it with a buffer

— Dividend yield of 7.06% over 12 months is above the market average but below our fair level of 7.0%

— The stock trades at a discount to its own history: EV/EBITDA of 3.79 versus a 3-year average of 5.36

Key figures, RUB bn

EBITDA margin expanded to 22.2% from 18.6% a year earlier, driven by higher meat prices and lower cost of sales

In H1 2026, Cherkizovo's revenue increased 3.5% to RUB 141.6 billion, while EBITDA grew 23.5% to RUB 31.4 billion. EBITDA margin reached 22.2% versus 18.6% a year earlier. The main contributors were the Chicken and Meat Processing segments, with revenue of RUB 89.3 billion and RUB 31.5 billion, respectively.

Higher poultry and pork prices, along with lower production costs, were key drivers of margin improvement. The report shows cost of sales rose only 1.3% to RUB 100.9 billion, while revenue increased 3.5%. This lifted gross profit by 14.4% to RUB 43.1 billion.

Net profit doubled on the back of higher operating profit and lower interest expenses

Net profit for H1 2026 was RUB 14.1 billion versus RUB 6.9 billion a year earlier – a 2.03x increase. Operating profit rose 31.8% to RUB 23.0 billion, while interest expenses fell 16.5% to RUB 9.3 billion, helped by lower debt and a reduction in the CBR key rate.

Net margin expanded to 9.9% from 5.1% a year earlier. Earnings per share came in at RUB 334.23 versus RUB 163.26 in H1 2025.

Net debt decreased by RUB 10.3 billion over 12 months, but Net Debt/EBITDA remains at 1.91

As of end-June 2026, Cherkizovo's net debt stood at RUB 139.9 billion. Over the last 12 months, it decreased by RUB 10.3 billion, and since the start of the year – by RUB 0.4 billion. Net Debt/EBITDA for the last 12 months is 1.91, which is comfortable for covenants and does not restrict investment opportunities.

The debt reduction was supported by positive operating cash flow: in H1, it amounted to RUB 19.8 billion. Interest expenses net of subsidies declined to RUB 9.3 billion from RUB 11.2 billion a year earlier.

Capex increased to RUB 9.6 billion in H1, but operating cash flow covers it with a buffer

Capital expenditures in H1 2026 totaled RUB 9.6 billion, higher than RUB 10.7 billion a year earlier (including purchases of property, plant, equipment and intangibles). Operating cash flow of RUB 19.8 billion comfortably covers investments, leaving room for dividends and debt reduction.

Free cash flow (operating minus capex) for the half-year is about RUB 10.2 billion. This allows the company to fund its investment program without increasing debt.

Dividend yield of 7.06% over 12 months is above the market average but below our fair level of 7.0%

Over the last 12 months, Cherkizovo paid dividends of RUB 0.0 per share, due to the specifics of the payment schedule. Our model estimates the next payout at RUB 158.27 per share, implying a forward yield of 4.9%. We consider a yield of 7.0% fair for this stock.

Based on our estimate, the payout ratio will be 0.38 of profit. At the current share price and expected dividend, the yield is below the target, which may indicate upside potential for the stock or the need for higher payouts.

The stock trades at a discount to its own history: EV/EBITDA of 3.79 versus a 3-year average of 5.36

Based on the last 12 months, Cherkizovo's EV/EBITDA is 3.79, significantly below the 3-year average of 5.36. P/E LTM is 3.71. This indicates the stock is undervalued relative to its own history and, likely, relative to the sector.

The low valuation is partly explained by high interest rates and sanctions risks that weigh on the entire Russian market. However, if the current EBITDA trend continues and debt declines, the multiple could expand.

Valuation on the latest reported figures

Bottom line

Cherkizovo reported strong results: EBITDA margin expanded to 22.2%, net profit doubled, and debt is declining. However, part of the profit growth stems from lower interest expenses, not just operational efficiency. The dividend yield remains below the fair level, and the question is whether the company can increase payouts. Given the current undervaluation (EV/EBITDA of 3.79 versus a 3-year average of 5.36), the stock looks attractive, but realizing this potential depends on sustained meat prices and further rate cuts.