Internal and external debt of Ukraine in 2010-2023
Source: Open4Business.com.ua and experts.news
Emporium LLC from Rinat Akhmetov’s SCM group has become the owner of 8.856607% of shares of PFTS, Ukraine’s largest stock exchange by trading volume (both in Kiev), on the eve of its announced plans to increase its authorized capital by 93.7%.
According to PFTS’ message in the NSCM disclosure system, the exchange received information about the new shareholder on February 2.
It is specified that Emporium is owned by Crossgold Limited, which, in turn, is owned by SCM Financial Overseas Limited, 100% owned by Akhmetov
There is no information about the seller of these shares yet.
As reported, PFTS earlier announced plans to consider at the extraordinary remote shareholders’ meeting on February 6 an increase in the authorized capital (AC) from UAH 32.01 million to UAH 62.01 million, or by 93.7%, through the placement of an additional 30 thousand shares with a par value of UAH 1 thousand through additional contributions without making a public offering.
Preliminarily, the list of persons among whom the shares of the additional issue will be placed is limited to the existing shareholders, however, the meeting may expand it by other investors intending to purchase the shares.
The largest shareholder of PFTS since the beginning of 2022 is Bohai Commodity Exchange (BOCE Co. Limited, Hong Kong) with 49.9% of shares. According to the SEC disclosure system, there were no other shareholders with a stake of more than 5% at the end of the third quarter of 2023.
At the same time, Prime Holding LLC in mid-October 2023 announced its intention to acquire 2,835 shares of the exchange, which is 8.8566% of its authorized capital.
PFTS did not publish financial statements after 9 months of 2021. According to information from the last annual shareholders’ meeting, the exchange reduced its net loss in 2022 compared to 2021 by 8.6% to UAH 3.641 mln.
The volume of trading on PFTS in 2023, according to its data, increased 3.6 times – up to 320.8 billion UAH, which amounted to 63% of the total trading volume of securities trading organizers in Ukraine, including in December – 28.6 billion UAH, or 66% of the total trading volume in the country.
In particular, the volume of government bonds traded on PFTS in 2023 increased 3 times to UAH 308.6 billion, corporate bonds of Ukrainian issuers – 20 times to UAH 1 billion (due to the recovery of primary placements), bonds of foreign countries – 5 times to UAH 0.7 billion, but transactions with shares were carried out for only UAH 19.4 million.
In December 2023, 39 participants of trades on PFTS concluded transactions with 48 issues of securities (Ukrainian government bonds – 33, Eurobonds of Ukraine – 1, corporate bonds of Ukrainian issuers – 7, bonds of a foreign state – 6, shares of Ukrainian issuers – 1), and in total in 2023 transactions were concluded by 49 participants with 114 issues of securities.
As of January 1, 2024, the number of PFTS members admitted to trading was 51: 30 banks and 21 financial companies. 353 issues of securities were admitted to trading on the exchange, of which 119 were in the Exchange Register.
At one time, LLC Emporium, established in 2007, was the owner of regional breweries OJSC PBC Krym, CJSC Dnipropetrovsk Brewery Dnipro, CJSC Firma Poltavpivo and OJSC Lugansk Brewery, but later SCM withdrew from this business. Emporium’s core business is commercial and management consulting.
The article collects and analyzes the main macroeconomic indicators of Ukraine. In connection with the entry into force of the Law of Ukraine “On Protection of the Interests of Business Entities during Martial Law or a State of War”, the State Statistics Service of Ukraine suspends the publication of statistical information for the period of martial law, as well as for three months after its termination. The exception is the publication of information on the consumer price index, separate information on statistical indicators for 2021 and for the period January-February 2022. The article analyzes open data from the State Statistics Service, the National Bank, and think tanks.
Demographic indicators of Ukraine
Director of the Ptukha Institute of Demography and Social Studies of the National Academy of Sciences of Ukraine, Academician Ella Libanova, predicts that about 50% of citizens will return to Ukraine after the war ends. At the same time, Libanova believes that if the economy is restored to pre-war levels, Ukraine will not be able to return the projected 4.5 million citizens.
She also drew attention to the fact that, according to Eurostat, there are currently 4.2 million Ukrainian military migrants in the European Union.
Earlier, Libanova described depopulation and labor shortages as an inevitable scenario for Ukraine.
According to the estimates she presented at the Regional Economic Forum, as of the beginning of this year, the population in the government-controlled areas was 31.6 million people, and now it has slightly increased.
Libanova pointed out that the population forecast for the beginning of 2033 within the borders of 1991 Ukraine ranges from 26-35 million people.
Economic recovery
Ukraine’s real gross domestic product (GDP) growth slowed to 8.2% in the third quarter of 2023 compared to the same period last year.
The NBU, which has raised its overall GDP growth forecast for this year to 4.9%, estimates the direct positive contribution of a higher harvest at 1.3 percentage points.
“At the same time, the key risk for our economy remains a longer duration and intensity of the war, as well as a decrease in the volume or loss of rhythm of international assistance, the resumption of a significant electricity shortage due to further destruction of the energy infrastructure and other risks,” said Maksym Urakin.
Analysis of Ukraine’s foreign trade
Maksym Urakin also drew attention to the factor of the growing negative foreign trade balance, which has been observed since the beginning of the war.
“The negative balance of Ukraine’s foreign trade in goods in January-September 2023 increased by 3.2 times compared to the same period in 2022 – $19.402 billion. This means that the cost of purchasing the goods Ukraine needs is almost $20 billion more than the income from exporting Ukrainian goods to other countries,” said Urakin, PhD in Economics.
Ukraine’s financial situation in 2023
According to the expert, the main factors characterizing the state of the Ukrainian economy are public debt, international reserves, and inflation.
“As of September 30, 2023, Ukraine’s public and publicly guaranteed debt amounted to UAH 4,886.13 billion, or USD 133.62 billion. This is a slight decrease compared to the historical maximum set in August,” Maksym Urakin said.
The expert noted that the main risks to the economy remain the duration of the war and the instability of international aid.
“In the third quarter of 2023, Ukraine’s GDP growth slowed to 8.2%. The negative balance of foreign trade increased 3.2 times, which is an alarming signal. The public debt has slightly decreased compared to August figures, but in 2024 it may exceed the country’s GDP for the first time, which poses significant risks to economic stability,” the economist said.
Thus, the economic situation in Ukraine, according to the founder of the Club of Experts, continues to require close monitoring and adaptation of strategies in response to changing conditions. Macroeconomic indicators of Ukraine and the world were discussed in more detail in one of the video programs of the Experts club
According to preliminary estimates by the National Bank of Ukraine (NBU), Ukraine’s international reserves decreased by 4.9%, or UAH 1.98 billion, to $38.525 billion in January. “This dynamics is due to the NBU’s foreign exchange interventions to maintain exchange rate stability, the country’s debt payments in foreign currency, and lower international aid inflows compared to previous months,” the NBU explained on its website on Tuesday.
Among other factors that determine the amount of reserves, the NBU cited operations in the foreign exchange market: in January, the regulator’s net sale of foreign currency amounted to $2.53 million, which is 29% less than the previous month.
The regulator noted that in January, the Cabinet of Ministers transferred $898.9 million to the NBU account, and paid $441.6 million for servicing and repaying the public debt.
The NBU also pointed out that the current volume of reserves was positively affected by the revaluation of financial instruments, adding $86.3 million.
“The current volume of international reserves provides financing for 5.1 months of future imports,” the central bank stated.
As reported, in January, the NBU lowered its forecast for Ukraine’s international reserves at the end of 2024 to $40.4 billion from $44.7 billion and to $42.1 billion from $45 billion at the end of 2025.
Exports from Ukraine to JYSK’s distribution centers increased by 60% in 2023, Iryna Romanchuk, Purchasing Manager of the chain, told Interfax-Ukraine.
“Over the past 12 months, exports from Ukraine to JYSK distribution centers have increased by 60% compared to the same period. However, this figure could have been higher if the borders had not been blocked at the end of 2023, which extended the delivery time from a week to a month, sometimes up to two, which had a very negative impact on all Ukrainian exporters,” Romanchuk said.
The expert clarified that due to the high cost of transportation to European countries, upholstered furniture made in Ukraine is losing its competitiveness, so now mostly cabinet furniture is exported. In addition, JYSK also buys blankets, pillows and household goods in Ukraine.
“At the beginning of 2022, some manufacturers located in the east of the country were unable to resume operations quickly due to a disruption in the supply chain of both components and finished goods. Therefore, we were forced to stop working with these companies. Today, our main suppliers are located in the central and western parts of the country,” said Romanchuk.
As an example of increasing the network’s work with Ukrainian manufacturers, she cited the furniture manufacturer Akord-Import (Khmelnytsky), with whom JYSK expanded cooperation in 2023 both by transferring the production of some furniture series from Europe to Ukraine and by expanding the range with new items. In total, this manufacturer shipped more than 1200 truckloads of finished furniture to JYSK’s European distribution centers in 2023.
JYSK is a part of the family-owned Lars Larsen Group with more than 3.2 thousand stores in 48 countries. Currently, there is an online store jysk.ua and 91 classic format stores in Ukraine, and in 2024 their number will reach 100. JYSK has more than 800 employees in the country.
JYSK’s revenue in the financial year 2022/23 amounted to EUR 5.2 billion.
IMC Agro Holding has completed the harvesting of corn in 2023 and achieved a record yield of 12.4 tons/ha, which is 1.3 tons/ha higher than the previous record set in 2018, said Alex Lissitsa, SEO of the agricultural holding.
“A total of 574 thousand tons were harvested from an area of 46.3 thousand hectares, with an average corn yield of 12.4 tons/ha, a record for all years of the company’s operations, which is 1.3 tons/ha higher than the previous record set in 2018,” he wrote on Facebook.
IMC is an integrated group of companies operating in Sumy, Poltava and Chernihiv regions (north and center of Ukraine). It controls 120.3 thousand hectares (120.0 thousand hectares under cultivation). As of September 30, 2023, the group operated in two segments: crop production and elevators and warehouses.
The agroholding’s net loss in 2022 amounted to $1.1 million against a net profit of $78.7 million a year earlier, with a 37.3% decrease in revenue to $114 million. EBITDA decreased threefold to $36.2 mln.
For the 2024 harvest, IMC sowed winter wheat on 20.3 thou hectares.
In the first nine months of 2023, IMC posted a net loss of $2.25 million, compared to $4.67 million in net profit for the same period in 2022. The agroholding’s revenue increased by 59.8% to $98.78 million, including exports, which increased by 24.4% to $70.23 million. A significant increase in production costs – by 55.6% to $92.4 million – led to a decrease in gross profit by 33.3% to $29.89 million. EBITDA in the first nine months of 2023 amounted to $13.85 million, which is 2.7 times less than in the first nine months of 2022. The report notes that the reason for the decline was the decline in harvest prices in 2023.
CORN, HARVESTING, IMC, RECORD
