JSC Ukrzaliznytsia is interested in deepening its local content policy and plans to revise its investment program to support Ukrainian manufacturers.
The press service of Ukrzaliznytsia said that such plans were disclosed by member of the company’s board Frantisek Bures.
According to him, the company intends to reduce excess costs and non-core assets for this purpose. “This will free the required sources of funding and turn blocked assets into liquid ones. At the same time, the company’s investment program will be maximally refocused on cooperation with internal producers. Thus, the Ukrainian economy will receive not only the benefits of reliable logistics services provided by Ukrzaliznytsia, but also additional support,” the press service said in the statement, citing Bures.
Ukrzaliznytsia expressed the hope that as a result, the share of production of new locomotives, spare parts, key components, repair services and modernization projects on the basis of Ukrainian enterprises will increase. Deepening the level of the local content policy for investments will support the Ukrainian economy through employment growth, technological development and the introduction of innovative know-how.
Bures said that at present, the company makes extensive use of industrial products from internal manufacturers, in particular, welding structures, transformers, electric motors and equipment, gear structures and systems, axial pins and wheel sets, construction equipment, power electronics, control systems and radio engineering, traffic safety systems, airborne alarm and security systems, light and sound systems, fire protection systems, sensors, video and communication systems, cables and conditioning systems, accumulators and batteries, installation and commissioning works. The company also uses the testing and certification, warranty and after-sales services, and other services.
“Based on my long experience working with international and domestic manufacturers of rolling stock, I am absolutely convinced that Ukrainian manufacturers are able to meet the highest quality requirements,” he said.
Bures also said that in order to fulfill the order of President of Ukraine Volodymyr Zelensky regarding the promotion of investment and strengthening the protection of foreign investment in the country, the industry needs to get government’s strong support and clear rules of the game on the market. “It is necessary to adopt the national local content strategy for large national investment projects with transparent rules, calculations and a monitoring methodology. This will involve more foreign partners in investing in Ukraine, contributing to the creation of new jobs and the development of the national economy,” he said.
National bank of Ukraine’s official rates as of 24/04/20
Source: National Bank of Ukraine
Kernel, one of the largest Ukrainian agricultural groups, in the third quarter of FY2020 (started in July 2019) cut sunflower oil sales by 2% year-over-year, to 380,900 tonnes.
According to an operations update posted on the website of the company, the share of bottled oil of total sales in January-March 2020 was 10% (39,000 tonnes).
Oilseeds crushing in Q3 FY2020 grew by 4%, to 940,650 tonnes, running crushing plants at full capacity.
The holding said that grain exports from Ukraine in January-March 2020 grew by 41%, to 2.15 million, including 35% of grain produced by company’s farming division, and the remaining was originated from external suppliers.
Export terminal throughput volumes in Ukraine reached 1.9 million tonnes in the reporting period, up 66% year-over-year, on the back of strong grain export volumes from Ukraine and increased contribution from new TransGrainTerminal. Grain and oilseeds received in inland silos fell by 65%, to 124,540 tonnes.
Kernel cut sunflower sails by 12% year-over-year, to 1 million tonnes. Sunflower crushing grew by 115, to 2.52 million tonnes. The company is progressing on the guidance to process 3.3 million tonnes of sunflower seeds for the whole FY2020.
In 9M of FY2020 grain exports from Ukraine grew by 30%, to 6 million tonnes.
According to the document, export terminal throughput volumes in Ukraine in 9M of FY2020 grew by 41%, to 4.82 million tonnes. Grain and oilseeds received in inland silos fell by 2%, to 4.12 million tonnes.
According to the pessimistic forecasts, the market for pet food may fall to 20% by the end of 2020, CEO of Kormotech Rostyslav Vovk said. “The experience of previous crises shows that according to the pessimistic scenario, the market for finished food in Ukraine can go down to 20%,” he told Interfax-Ukraine.
According to Vovk, in the field of animal care, the crisis becomes considerable in one and a half or two years after its beginning. He said that over the past five years, the food market for cats and dogs has grown by 15% annually. The market volume amounted to 122,000 tonnes in 2019.
“This year it will not grow in full size, but it will not go down significantly either, as feed is a product that is difficult to quickly replace (with another feed or food from the table). At the same time, we are predicting, based on the results of previous crises, that demand for keeping expensive pedigreed dogs and cats will decrease slightly. This means that kennels will become less involved in breeding and this will certainly lead to a decrease in feed consumption,” the CEO of Kormotech said.
According to him, the population will have significantly less money by the autumn, and if product prices begin to rise, pet owners can not only buy less, but also look for a cheaper alternative.
“Customers who generally preferred products of the economy segment are more likely to start buying less, adding water to dry and cereal to a wet diet,” Vovk said.
The CEO of Kormotech said that the demand for the company’s products grew by 30% in the second half of March, and as of the second week of April began to return to normal range.
“We assume that the owners of the animals made feed stocks in the same way as other products. In small retail outlets, usually located near residential buildings, sales grew by 30% (the share of this sales channel for our products was 15%), online stores by 45% (the share of this channel is 5%). Pet stores are key point of sale, showed an increase of 32% (the share of this channel is 55%),” Vovk said.
Kormotech exports products to about 20 countries, including France, Estonia, the Netherlands, Slovenia, and Poland. The facilities of the company include two plants for the manufacture of dry and wet pet food. The company produces products for cats and dogs under its own brands Optimeal, Club 4 Paws (Meow! and Woof! trademarks) and in private label.
The ultimate beneficiaries of Kormotech are Olena and Rostyslav Vovk.
As of the second quarter of 2019, the largest investors in Ukrainian equity securities were the European Bank for Reconstruction and Development (EBRD, the United Kingdom) with $109.6 million, Norges Bank Investment Management (NBIM), the Norwegian central bank, with $83.5 million and Cascade Investment of former MP Vitaliy Khomutynnik with $69.7 million, which invested only in Ukraine among EBRD regions of operation.
According to the March 2020 report Investor Base of Securities Markets in EBRD Regions made in collaboration with HIS Markit and released on the EBRD’s website, Kairos Investment Management (Great Britain) with $57.2 million and Kairos Partners (Italy) with $53 million also entered the top five major investors in Ukrainian securities by the middle of 2019.
The bank said that in general, in the region of Eastern Europe and the Caucasus (EEC) EBRD invested $2.05 billion in securities, NBIM invested $7.27 billion, Kairos Investment Management and Kairos Partners invested $365.5 million and $130.8 million, respectively, while Cascade Investment in the region invests only in Ukrainian companies.
The leading investors in Ukraine were also PTE PZU (Poland) with $49.4 million ($4.71 billion in EBRD regions), Kopernik Global Investors (the United States) with $39.9 million ($440.1 million), Aviva Santander (Poland) with $38.5 million ($6.16 billion), Templeton Asset Management Singapore (Singapore) with $35.2 million ($356.6 million) and Alfred Berg Asset Management (Sweden) with $31.1 million ($1.93 billion), according to the report.
“Ukraine’s top shareholders were all low- and medium-turnover investors, with just $19.4 million invested by high-and very-high turnover firms. Ukraine boasted the highest percentage of low-turnover firms in the EEC region, apart from Armenia and Belarus, which each had just one disclosed holder,” the bank said in the document.
In general, according to the report, investment in equity securities of Ukrainian companies for five years increased by 22.8% and for two years by 10.1%, to $938.3 million, although their number decreased from 126 to 123. Total capitalization of Ukrainian companies was estimated at $4.3 billion.
According to it, strategic investments in Ukraine in the second quarter of 2019 slightly outbalanced institutional ones, for 41.5% compared to 36.7%, respectively.
Passive investments remain extremely insignificant with amount of $32.4 million, having decreased by $2.5 million over two years, while active investments have grown by 10.8% during that period.
In the total volume of investments in the government, the share of European investors was 74.1%, North African was 20.9%. In addition, Asia accounted for 5% of institutional investments, most of which belonged to Templeton Asset Management.
“In Ukraine, we would invest mainly through Poland and London, where the biggest companies are listed. I would rate the ease of trading in Ukraine a 3. The ease of trading in Slovenia is a 3. The company we are invested in there is listed in London. The ease of trading in Turkey is a 4 and Cyprus also a 4. The market in Poland is very easy to access, I would rate ease of trading a 5,” a representative of the European Mutual Fund (assets under management are more than $50 billion) said in the report.
According to a representative of the North American mutual fund with assets under management of more than $10 billion, the company is optimistic towards Ukraine, due to the political events taking place in it.
“We like to look for countries that are reforming and moving towards freer, more liberal economic policy making… Ukraine is one country where we are spending a lot of time given the political changes there,” the investor said in the report.
The macroeconomic aid of EUR 1.2 billion the European Commission has decided to propose to Ukraine will be disbursed at two installments, Ukraine’s envoy to the EU Mykola Tochytsky told Interfax-Ukraine in Brussels on Wednesday.
The first EUR 600 million will be allocated unconditionally, immediately after adoption by the European Parliament and the Council of the EU, and the other EUR 600 million will be extended under some specific conditions, which the EU and Kyiv will begin negotiating in the near future, Tochytsky said in commenting on the European Commission’s decision to distribute EUR 1.2 billion in emergency macro-financial assistance to Ukraine to limit the economic fallout of the coronavirus pandemic.
“The first tranche of EUR 600 million will be provided unconditionally and the second upon Ukraine’s compliance with criteria to be agreed upon with Kyiv within the next few months,” he said.
Asked what these criteria could be, Tochytsky pointed out that no specific talks on the matter have been started so far, but, judging by the criteria set for other similar agreements concluded earlier between Kyiv and Brussels, these could be some measures related to public finance administration, anti-corruption efforts, taxation, labor and social protection, business climate, customs, and so on.
“Apart from the EU, there is no other association of countries that could provide a similar amount of assistance not only to its members but also to other partners. We are grateful to our European partners for their extremely timely and significant support for our economy, business and population,” he said.
In procedural terms, the provision of this EUR 1.2 billion emergency macro-financial assistance by the European Commission is “only the beginning,” as it has yet to be adopted by the European Parliament and the Council of the EU, Tochytsky said. “Simultaneously, negotiations will proceed on signing a relevant memorandum between Ukraine and the EU, which will be subject to ratification by the Ukrainian Verkhovna Rada after its signature. In other words, this is a lengthy process,” he said.
The European Union provides macro-financial assistance only to its partners that successfully cooperate with the International Monetary Fund (IMF), Tochytsky said. “This is a general condition. Therefore, the disbursement of the last, the fourth, tranche of the fourth macro-financial assistance program, which was endorsed back in September 2018, as well as the second tranche of the present emergency macro-financial assistance, depends on the passage by the parliament of the so-called banking bill in an edition agreed upon with the IMF,” he said.
Considering this, the Ukrainian diplomat said he expected that the fourth installment of EUR 500 million will be disbursed in the first half and the EUR 600 million of the emergency assistance in the second half of the year.
Apart from this, the EU decided on April 8 to offer Ukraine an aid package in the amount of EUR 190 million, Tochytsky said. “These resources, in particular, will be allotted for helping the people living in the areas that suffered from Russian aggression in the eastern part of the country. This includes EUR 30 million as so-called technical assistance for the Ukrainian healthcare system, which implies not only the procurement of the necessary equipment and supplies but also for upgrading [the medical personnel’s] qualification and facilitating the Health Ministry’s legislative work,” he said.
Another EUR 45 million is to be spent on a program of support for small and medium-sized businesses and the already existing programs, and some part of this sum will also be offered as easy loans, including those denominated in hryvnias, Tochytsky said.
This assistance also includes EUR 10 million for a state administration support program, and some funds will also be provided to non-governmental organizations, he said.
As another example of EU’s financial assistance to Ukraine, Tochytsky mentioned the allocation of EUR 13 million of humanitarian aid disbursed on April 16. “This tranche will be spent not only on fighting coronavirus but also on other needs, such as, for example, water supply restoration,” he said.
