Business news from Ukraine

KYIV. Feb 23 (Interfax-Ukraine) – The restructuring of enterprises in the aerospace sector of Ukraine aims at creating new samples of missile equipment, taking into account current top-priorities of the state, Head of the State Space Agency of Ukraine (SSAU) Liubomyr Sabadosh has said in an interview with Interfax-Ukraine.

Assessing the approaches and tasks of the reforms that will start this year, taking Dnipropetrovsk-based Pivdenne Design Bureau and Pivdenmash being prepared for the restructuring, he said that general approaches of the SSAU to the restructuring of the enterprises could be presented in the following way: innovation development via corporatization with the retaining of 100% of shares in state ownership.

Sabadosh said that as part of the preparation for the structural reforms, the SSAU has drawn up the concept for reforming the sector until 2020 and the draft bill on the specifics of corporatization of the SSAU’s enterprises, being agreed by the agencies now.

“I would say that among advantages of the joint-stock company is the transparent financial and economic policy, public disclosure of the financial report and the improvement of the management structure,” he said.

“One of the tasks of the structural reforms is the increase of the prestige of the rocket science profession and the attraction of engineers and designers of rockets,” he said.

“The clear distribution of functional duties would allow focus on the realization of strategic sector development measures,” he said.

KYIV. Feb 23 (Interfax-Ukraine) – The number of merger and acquisition (M&A) deals in Ukraine in 2015 grew by 26.1%, to 140, while their total volume fell by 39.4%, to EUR 504.9 million, according to a report of CMS law firm.

The largest deals of the previous year were the acquisition of Odesa’s Looksery startup by Snapchat mobile application for EUR 132.7 million, the acquisition of 100% in Astelit by Turkey’s Turkcell Group for EUR 89.3 million, the acquisition of 29% of shares in private joint-stock company Inter TV by Dmytro Firtash and Serhiy Liovochkin for EUR 88.52 million, the acquisition of 100% of the Arena Entertainment complex for EUR 36.71 million by an unknown Cyrpus-based structure, the acquisition of a minority stake in Rozetka.ua online retailer by Horizon Capital for EUR 36.41 million, the acquisition of 70% of shares in KUB-Gas from Serinus Energy by Burisma Holdings for EUR 27.5 million, the acquisition of a part of assets of Creative Group by Artur Hranets and Rysbek Toktomushev for EUR 27.31 million, the acquisition of 9.3% of shares in public joint-stock company Motor Sich by an unknown investor for EUR 25.43 million, the acquisition of a minority stake in Ukraine Department Store by Irish Bank Resolution Corporation Limited (IBRC, Dublin) for EUR 10.03 million and the acquisition of 10% in private joint-stock company Zernoproduct MHP (Myronivka, Kyiv region) by Mironivsky Hliboproduct (MHP) for EUR 8.13 million.

The experts said that 2015 did not bring radical changes to the M&A market in Ukraine, as we had predicted. Whilst 2015 saw an increase in the number of M&A deals, the overall deal value dropped significantly, continuing the trend from 2014.

The experts said that in 2013 the number of M&A deals in Ukraine was 249, and their total value was EUR 4.768 billion and in 2012- 342 worth EUR 2.245 billion.

“Given the continuing political unrest, we do not expect a boost in the M&A market in Ukraine in 2016. At worst, we see 2016 being much the same as 2015, with a few strategic exits and a number of high profile deals carried out by Ukraine’s elite. The most attractive sectors in 2016 will continue to be financial services, agriculture and telecoms & IT,” the firm said.

Despite all the challenges, the investment appetite for Ukraine remains strong, and it is anticipated that the government’s continued efforts to improve the investment climate, including reforms in the agriculture, energy and banking sectors and anti-corruption measures implemented in 2015 will have a positive impact on the M&A market, starting as early as 2016.

The optimistic expectations in relation to Ukraine’s 2015 privatisation programme were not met, as the government failed to prepare the legal framework and privatisation targets for a transparent and competitive sale process, the experts said.

KYIV. Feb 22 (Interfax-Ukraine) – PJSC Ukrainska Zaliznytsia expects the revenues of its subsidiary Ukrainian High-Speed Railway Company from passenger traffic in 2016 to amount to UAH 663.7 million, which is 15.3% higher than the plan for 2015 and 15.1% more than the rate expected for 2015.
According to an explanatory note to the draft financial plan of the company for 2016, the revenues are expected to grow due to the increase in the number of passengers carried, the introduction of high-speed trains on new directions, putting on additional pairs of trains.
Thus, high-speed Intercity+ trains are to be introduced on the following routes: Kyiv-Kharkiv-Kyiv, Darnytsia-Lviv-Darnytsia, Kyiv-Kostiantynivka-Kyiv, Kyiv-Dnipropetrovsk-Krasnoarmiysk-Kyiv, Kyiv-Zaporizhia-Kyiv, Darnytsia-Truskavets-Darnytsia, Darnytsia-Odesa-Darnytsia, Kyiv-Kryvy Rih-Kyiv. High-speed Intercity trains run on the Darnytsia-Ternopil-Darnytsia route.

KYIV. Feb 22 (Interfax-Ukraine) – Ukraine has extended for another five years an anti-dumping duty of 31.58% on imports of medium density fiberboard
(MDF) produced in the Russian Federation.
According to a report by the Interdepartmental Commission on International Trade in the Holos Ukrainy newspaper, the decision was made on February 12 after the revision of anti-dumping measures and comes into force on the date of publication.
The report notes that not a single Russian producer or exporter of MDF registered within the review procedure.
On the basis of information available at the ministry, it was found out that in 2012-2014 MDF exports to certain third countries have signs of dumping.
The commission also notes that Russian MDF producers have unused production capacity, which is several times larger than the volume of consumption of this product in the domestic market of Ukraine.

KYIV. Feb 22 (Interfax-Ukraine) – Public joint-stock company State Food-Grain Corporation plans to send over UAH 10 million of capital investment in the Krolevets grain production center (Sumy region) in 2016.

“Many plans and much work are ahead. This year large capital investment of over UAH 10 million is planned. Now we’re working on the project to modernize power supply to the enterprise with the switch to the first class power consumption. This would allow saving on purchase of power and cut cash cost of finished products,” the corporation said, citing Director of Krolevets grain production center Hennadiy Hordiyenko.

He said that the branch would resume production of pasta in 2016.

“At the beginning of the year we plan to restore production of pasta. We have all the required equipment and materials for this: Italian equipment, high-quality flour and a desire to supply high-quality products to the market,” Hordiyenko said.

Krolevets grain production center makes wheat flour, mill offals and mixed fodder. The center accepts, dries, stores and ships grain and leguminous crops and oilseeds.

In August 2010, the government decided to create the State Food and Grain Corporation of Ukraine. The corporation has a chain of branches, comprised of grain storage facilities, flourmills, fodder factories and a cereals factory. The 53 subdivisions of the corporation can store a total of 3.75 million tonnes of grain, which includes the grain handling capacities of Odesa and Mykolaiv ports of around 2.5 million tonnes of grain cargo per year.