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total revenues declining 0.6% y/y. Headwinds included the significantly downsized roll-out, major (and questionable) assortment adjustments, and intensified competition within the convenience format. Analysts are not expecting any change in the short-term. The fact that CEO Pedro Manuel Pereira Da Silva has exited the share capital is a further negative for sentiment. Analysts reiterated their “sell” recomendation. In December, revenues slid 0.6% y/y to RUB27.8bn, implying a material deceleration from the 5.3% y/y rise in November and bringing the first ever absolute decline in the top line of a listed Russian food retailer. In 2016, the company took a significantly more conservative stance on organic roll-outs (83 net convenience outlets vs. 498 a year ago) and, as a result, slowed its selling space expansion to 5% y/y in December from 20% y/y in January 2016.
McDonald’s plans to increase the share of locally produced inputs to 100% by 2019 , according to President Khamzat Khasbulatov. “Whereas 27 years ago only 20% of everything that we sold in our restaurants was produced in our country, today this figure has reached 85%. And we will drive the level of local production of everything that we do in Russia to almost 100% in the next two years. We will have the entire menu produced in Russia until the end of 2018,” Khasbulatov said. McDonald's plans to launch potato production in Russia in 2018, which will mean that all vegetables used in cooking are produced locally, he said. Khasbulatov also said that McDonald's plans to open about 50 outlets in 2017 against 73 in 2016. “I, to tell honestly, do not know what proportion of the launched restaurants will be on account of corporate restaurants and on account of our franchisee partners,” he said.
The Russian KFC fast food network saw revenues grow by a third (33%) in 2016 , reports Interfax, referring to the report of the network owner Yum! Brands Russia (a division of the American Yum! Brands). The cash equivalent was not disclosed. From KFC’s total revenue, the share of Russian business accounts for 3%. The Russian business showed the highest growth among all the markets where there is a KFC. In the fourth quarter revenue growth in Russia amounted to 34%, vs only 8% growth in the companies global network. (adjusted for exchange rate differences), and 7% for the whole year. Total revenue Yum! Brands in 2016 decreased by 4% to $6.366bn, against its own restaurant sales fall by 4% (to $4.2bn). At the same time franchise restaurants and businesses operating under license, increased their revenue by 4% (up to $2.166bn). Operating profit rose 16% to $1.625bn. By the end of the year, there were 20,604 KFC restaurants in the world, 16,409 Pizza Hut restaurants and the 6,604 restaurant Taco Bell.
9.2.6 Agriculture corporate news
The Renova Group of Russian billionaire Viktor Vekselberg plans to invest in greenhouse clusters in four Russian regions , Vedomosti daily reported on February 27, citing an unnamed representative of the group. "The group sees greenhouses as a promising business direction due to the need of import substitution," a Renova spokesperson commented on the investment group's first agriculture project. RUB25bn (€400mn) will be invested in 100ha of greenhouses. Reportedly the group will build greenhouses in the Sverdlovsk, Perm, Chuvashia, and Komi regions, planning about 75,000 tonnes of produce annually, mostly of tomatoes and cucumbers. The regions were chosen due to the energy assets of the group being located there, as about 35-45% of the greenhouse costs are energy and heat costs. Analysts surveyed by Vedomosti
108 RUSSIA Country Report February 2017 www.intellinews.com