Ukrproduct Group, a major Ukrainian producer of packaged butter and processed cheese, reported a net loss of GBP0.19 million for the first half of 2025, compared to a net profit of GBP0.90 million for the same period in 2024.
“Financial expenses in the first half of 2025 increased by 35.6% to GBP0.5 million…, mainly due to the recognition and capitalization of deferred interest and fees related to the EBRD loan (approximately GBP2.1 million), with interest now accruing on a higher principal balance. Net foreign exchange losses increased to GBP0.9 million (H1 2024: GBP0.2 million) due to the depreciation of the Ukrainian hryvnia,” the company explained in a report to the London Stock Exchange on Tuesday.
As reported, in December 2024, the European Bank for Reconstruction and Development (EBRD) decided to exercise its right under the loan agreement and charged a commission of GBP2.0 million, which increased the company’s liabilities to the bank to GBP8.1 million.
The group’s gross profit for January-June increased by 2.8% to GBP3.53 million, while operating profit fell by 17.2% to GBP1.22 million and EBITDA by 18.3% to GBP1.5 million.
Ukrproduct Group’s revenue in hryvnia increased by 32.9% in the first half of the year, while in British pounds sterling, the increase was 21.6% to GBP20.23 million.
“Butter: Sales rose sharply to GBP 3.3 million (H1 2024 – GBP 1.3 million), mainly due to the expansion of exports of packaged butter. Domestic sales were deliberately reduced to avoid unprofitable deals, with sales in Ukraine limited to selected customers,” the company said.
According to the report, sales of processed cheese and cheese products increased by 4.7% to GBP11.2 million, spreads to GBP2.0 million from GBP1.7 million, mainly due to increased export volumes.
Sales of skimmed milk powder and skimmed milk products increased to GBP0.8 million from GBP0.5 million, reflecting strong demand in the EU at favorable prices. However, the possible abolition of duty-free and quota-free access under the EU’s Autonomous Trade Measures (and any revision of quotas) could significantly reduce future export volumes, Ukrproduct added.
According to the report, the sandwich spreads category remained stable, with sales of GBP0.6 million, while sales of kvass and beverages declined slightly to GBP1.0 million from GBP1.1 million. This reflects weaker demand for kvass due to the unusually cool summer, while kombucha sales are accelerating, benefiting from innovation and lifestyle-oriented positioning.
In addition, in the first half of 2025, Ukrproduct Group sold sunflower seeds worth GBP0.2 million, eight times more than last year, which allowed it to maintain profits in this segment despite lower market prices.
As noted, operating expenses increased by 13.5% to GBP 2.3 million, mainly due to higher payroll costs (inflation and labor shortages): labor turnover remains high, as younger workers move abroad or are unavailable due to mobilization and family dispersion, incentives must be provided to retain staff, increase training, and selective hiring. “Changes that allow men aged 18 to 22 to move abroad may further affect the availability of labor,” the report said.
As of June 30, 2025, Ukrproduct Group’s net assets had fallen to GBP1.6 million from GBP4.9 million a year ago, and cash balances to GBP0.1 million from GBP0.5 million. The company continues to violate a number of provisions of the loan agreement with the EBRD, including non-repayment of tranches A and B and late payment of interest since March 1, 2022, and discussions with the EBRD on the potential restructuring of the loan and accrued interest, which began in 2021, are ongoing. At present, the EBRD has not exercised its right to accelerate the repayment of the loan.
In assessing its prospects for the end of 2025, Ukrproduct assumes that the business environment will remain unstable due to the ongoing war in Ukraine and financial pressure. The company plans to optimize its product range towards value-added products, diversify its export destinations, and align production more closely with confirmed orders, as well as support the further development of recently launched products (varieties of kvass, kombucha, sandwich spreads).
“Liquidity remains limited and depends on disciplined working capital management and continued creditor tolerance while negotiations with the EBRD on restructuring are ongoing. We are limiting capital expenditure to essential safety and maintenance measures, seeking to make advance payments where possible, rationalising inventories and focusing on the most profitable product range to preserve cash,” said the company, whose capital investments in the first half of this year amounted to GBP0.49 million, compared to GBP0.50 million in the first half of last year.
As reported, Ukrproduct Group posted a net loss of GBP2.04 million for 2024, compared to a net profit of GBP0.39 million for 2023. Revenue in hryvnia increased by 13%, while in British pounds sterling the increase was only 0.2% to GBP37.08 million.
