Russia’s biggest turkey company suffers major losses

According to a statement from Eurodon’s press service in late October, all the turkeys on the company’s farms died due to a power outage. Eurodon had not paid its electricity bills for more than two months, resulting in a debt of RUB50 million ($800,000), according to estimates from local power supply company TNS Energo Rostov-on-Don. As a result, the company cut off the power supply.

However, in a further statement posted on its website on 29 October, Eurodon retracted its previous statement, claiming that, rather than the power outage, the turkeys actually died because of “underfeeding and other problems that occurred due to a series of force majeure​ events”.

Eurodon stressed that these events were associated with quarantine measures applied within the company in connection with several avian influenza (AI) outbreaks. In addition, the hatchery and farms containing the parent flock did not have their power supply cut off and continued to operate, it claimed.

No details have been released as to how many turkeys have actually died. Eurodon runs 26 farms with 300 poultry houses and produced 40,000 tonnes (t) of turkey last year. The total poultry stock at the farms was around 3.5 million as of late 2017.

On an earlier occasion, Olga Grekova, press secretary of Eurodon, told GlobalMeatNews​ that the company had been aiming to become the biggest turkey meat producer not only in Russia, but also in Europe. Grekova revealed that Eurodon had established capacity to produce 150,000t of turkey meat a year and would be able to expand this to 270,000t a year in future.

But those plans were disrupted by two AI outbreaks, which caused the company overall losses of RUB2.6bn ($40m), negatively affecting its finances.

Bailout plan​

It would take RUB5bn ($80m) to restore production at Eurodon, said Vadim Vaneev, deputy general director of the company during a press conference in Rostov on 7 November.

In addition to the AI outbreaks, Eurodon’s financial problems were compounded by the sudden freezing of RUB5.2bn ($83m) on a total bank loan of RUB17.2bn ($270m), with the result that the company had to stop construction of a major meat processing plant halfway through, Vaneev revealed. 

Eurodon employs 3,400 workers and layoffs were now in the pipeline, Vaneev admitted. However, one of the main shareholders of Eurodon, state-owned bank Vnesheconombank, was working on a bailout plan for the company, Vaneev added.

Vnesheconombank has appointed a crisis manager to the position of general director at Eurodon, and has announced plans to allocate RUB1.6bn ($25m) to support the company. The crisis manager has been instructed to determine the price of the company, so some part of the holding could be put up for sale. According to Vaneev, Eurodon’s sale price could be close to RUB70bn ($1.1bn).