“Ukrproduct Group, a major Ukrainian producer of packaged butter and processed cheese, posted a net profit of GBP0.39 million in 2023, compared to a net loss of GBP0.80 million in 2022.
According to a report posted by the company on the London Stock Exchange, revenue decreased by 5.4% to GBP36.99 million, but increased by 19.5% in hryvnia terms.
“Ukrproduct’s consolidated revenue in FY2023 increased by 8% in UAH. The overall sales growth was driven by a focus on the development of key products, namely processed cheeses and processed cheese products, the development of new product categories, snacks and beverages, as well as the expansion of the group’s presence in retail chains,” the document says.
It is specified that in the processed cheese and processed cheese products category, sales amounted to GBP24.9 million, which reflects a 25.7% increase in revenue in hryvnia compared to the previous year, while in physical terms, sales increased by 12.4%. This was mainly due to an increase in exports to the Middle East, the focus of marketing campaigns on these product categories and the development of new positions, the report says.
According to the report, sales of butter in 2021 amounted to GBP3.1 million, reflecting a 3.4% increase in revenue in UAH terms, while sales in volume terms decreased by 4.3%. “A significant increase in the purchase price of raw milk and butter in Ukraine in the second half of 2023, rising logistics costs and increased competition in the market led to a decrease in the margin of butter sales,” Ukrproduct added.
Spreads sales decreased to GBP4.6 million in 2023 from GBP5.6 million in the previous year, down 6% in hryvnia terms and 12.9% in volume terms. The decline was mainly due to increased competition in the market, the company explained.
It is indicated that sales of skimmed milk powder fell by 52.1% in hryvnia, or to GBP1.1 million from GBP2.5 million a year earlier. In volume terms, skimmed milk powder sales decreased by 43.4%. Due to the significant decline in skimmed milk powder prices in 2023, the Group minimized the production of this product for sale in favor of using it as an ingredient in the production of processed cheeses.
Sales of kvass and beverages in FY2023 amounted to GBP1.8 million, up 90.2% in UAH terms and 42.8% in volume terms. The growth was driven by the resumption of a full sales period in fiscal 2023, while in 2022 the sales season in key kvass regions was postponed until June due to the Russian invasion of Ukraine.
It is noted that in 2023 Ukrproduct focused on trade marketing activities, in particular on providing discounts to customers and consumers, rather than on advertising campaigns, resulting in a 51.3% decrease in marketing expenses compared to 2022.
Other operating expenses in 2023 amounted to GBP1.1 million compared to GBP1.6 million in 2022, including impairment losses on inventories of products that the company was unable to export due to the blockade of Ukrainian Black Sea ports, as well as minor fines and some VAT losses.
According to the report, Ukrproduct’s EBITDA for 2023 amounted to GBP2.4 million, which is 32.8% higher than in 2022.
It is noted that financial expenses in 2023 increased by 67.6% to GBP0.78 million, mainly due to higher interest rates and recognized additional interest expense on the loan from the European Bank for Reconstruction and Development (EBRD) for previous periods. It is specified that in June 2023, despite the difficult operating environment due to the war in Ukraine, the EBRD decided to exercise its right under the loan agreement and increased the interest rate on the loan retroactively from September 2021. At the same time, the company has not yet paid the EBRD a tranche of EUR 2.1 million, which was due in December 2022, and did not pay interest on the debt in the amount of about EUR 5.7 million from March 2022 to December 2023. Restructuring negotiations are ongoing.
Ukrproduct’s free cash flows at the end of 2023 amounted to GBP0.4 million, the same as a year earlier.
“In 2024, the group plans to focus on maintaining its existing production facilities, supporting sales volumes and continuously improving operational efficiency,” the document emphasizes.
It is also reported that as of June 19, 2024, Jack Rowell resigned from the Board of Directors after 19 years as its Chairman. Serhiy Yevlanchyk became the interim chairman of the board in addition to his role as Ukrproduct’s executive director.
As reported, the company earned GBP0.65 million in net profit in the first half of 2023, compared to a GBP0.20 million net loss in the same period of 2022. Its revenue in the first half of the year remained at the level of the first half of 2022 – GBP18.3 million, but increased by 19.5% in hryvnia.
Ukrproduct Group, a major Ukrainian producer of packaged butter and processed cheese, expects to receive GBP 1.16 million (UAH 45.37 million) in net loss over 2020 (taking into account losses from exchange rate differences) versus GBP 2.03 million (UAH 79.40 million) in net profit in 2019.
According to unaudited financial data posted by the company on the London Stock Exchange, Ukrproduct’s revenue may grow by 11.1%, to GBP 55.5 million (UAH 2.17 billion), and gross profit will remain at the 2019 level at GBP 4.7 million (UAH 183.83 million).
“The gross profit margin decreased by 0.9 percentage points to 8.5%, as a result of the rising raw milk prices and a sharp dip in milk protein prices worldwide during peak supply over the summer months that was to some extent offset by an improvement of margins in spreads, processed cheese and beverages,” according to the company’s report on the stock exchange.
The company saw rise in sales of spreads by 132.8% and processed cheese products by 79.9% in 2020, driven by their rebranding and repositioning, while sales of butter declined. According to the company, last year it took first place in the ranking of exporters in terms of proceeds from sales of processed cheese products, and its market share was 59%.
Over 2020, Ukrproduct intends to receive GBP 800,000 (UAH 31.29 million) of operating profit versus GBP 1.57 million (UAH 61.41 million) in 2019.
“Despite the COVID-19 pandemic, 2020 has turned out well and been stable for the dairy industry, with the consumption and production of dairy products increasing against the background of quarantine restrictions. The dairy industry remains vital for consumers and therefore the Company has maintained its performance and has worked throughout 2020 without interruption, navigating new market realities,” the report said.
According to the report, due to quarantine measures in 2020, revenue from sales of beverages remained at the level of 2019 and amounted to GBP 1.7 million.
“In order to ensure high quality cheese production the Group concentrated on the use of its own semi-processed materials in the production of processed cheese and minimised skimmed milk powder [SMP] production due to the global dairy commodities prices contraction,” the report said.
The company said it plans to pursue stronger margins and to further escalate sales of processed cheese and spreads, as well as to improve margins of packaged butter by a continuous upgrade into the premium market segment. It is also looking into the most efficient ways of procuring raw milk, which is subject to local competition that has been strengthening and thus increasing prices.
The full audited accounts are in the process of being finalised and the Company expects to announce these within the deadlines.
The Ukrproduct Group, a large Ukrainian producer of packaged butter and processed cheese, saw GBP 0.74 million of net profit in H1, 2019 that is 1.8 times more than over the same period in 2018.
According to the company’s report posted on the London Stock Exchange, Ukrproduct revenue saw 1.5-fold rise, reaching GBP 22.24 million, and gross profit grew by 1.55 times, up to GBP 1.93 million.
Through the first six months of 2019 operating profit of the company totaled GBP 0.4 million compared with operating loss of GBP 0.19 million in H1 2018.
As at June 30, 2019, the group had total liabilities of GBP 16.8 million against GBP 15.1 million in 2018, net assets and net assets of GBP 1.3 million million with cash balances of GBP 0.2 million.
According to the group, the main drivers of revenue growth were butter, beverages and processed cheese. The Company estimates that Ukrproduct’s butter market share in Ukraine has increased by approximately 3% to 10.1% when comparing H1 2019 with H1 2018, whilst market share in processed cheese and processed cheese products has decreased by approximately 0.3% to 8.5% when comparing H1 2019 with H1 2018.
“However, in the first half of 2019, Ukrproduct became the top exporter of processed cheese in Ukraine. Hard cheese sales decreased by 2%, whilst sales of bulk & packaged spreads increased by 17%,” the group said.
As the group said, sales of kvass beverage improved, driven by an active marketing strategy and the launch of a new product containing natural ingredients of juice and mint.
The most significant portion of the Group’s revenue comes from selling packaged butter and supplementary products, which represented 57.2% in the first half of 2019 and 45.9% in first half of 2018 of total revenue for the relevant periods.
Export sales of Ukrproduct increased due to rising export sales in supplementary products, however, export sales of packaged butter and spreads decreased overall. Skimmed milk products exports continue to decline as a result of worldwide prices being lower than domestic market prices.
The Group continues to expand export sales into non-dairy products: beverages and other food commodities.
Ukrproduct Group produces branded dairy goods (the Nash Molochnyk, Narodny Produkt, Vershkova Dolyna and other trademarks).
Ukrproduct Group, a large Ukrainian producer of packaged butter, processed cheese and kvass, expects operating profit of about UAH 16.2 million (GBP500,000) in 2017 compared to an operating loss of approximately UAH 7.4 million (GBP200,000) in 2016. “The Ukrainian dairy foods and beverage producer is guiding for revenue of around GBP31 million for 2017, which would be a strong increase on the GBP20.2 million posted in 2016. Operationally, Ukrproduct expects a profit of approximately GBP500,000 after an operating loss of GBP200,000 in 2016, which will boost earnings before interest, tax, depreciation, and amortization,” reads a report by Ukrproduct on the website of the London Stock Exchange.
“Despite these improvements, the company is expecting an overall loss due to the negative impact of foreign exchange,” it states.
According to a press release, by the end of 2017 Ukrproduct estimated its net liabilities at UAH 429 million with free cash stocks of UAH 18.7 million. However, after the end of the financial year, the financial situation of the group improved after a new loan agreement for UAH 65 million with Creditwest Bank and the subsequent full repayment of the loan from OTP Bank.
Ukrproduct notes that in 2017 the Ukrainian economy demonstrated the encouraging GDP growth, while wage growth led to an increase in consumer confidence, which improved the trading capacity of the group within the country, despite the continuing competition in the market. In addition, the weakening of the hryvnia provided Ukrproduct with additional opportunities for business development in export markets, the report says.
