Business news from Ukraine

STATE-RUN UKRZALIZNYTSIA LOSES ONE THIRD OF FIXED ASSETS

The Temporary Investigative Commission of the Verkhovna Rada, created to check and assess the state of JSC Ukrzaliznytsia, found that by now the company has lost one third of its fixed assets.
“We state that the management of Ukrzaliznytsia does not protect or develop property and fixed assets entrusted to it by the state. The audit established the loss of one third of fixed assets. During the five years we studied, Ukrzaliznytsia fulfilled the capital investment plan by only 65%. Almost UAH 30 billion has not been disbursed in this direction. As a result, the railway infrastructure is in critical condition,” Head of the Temporary Investigative Commission Yulia Hryshyna said during the presentation of the report to the Verkhovna Rada.
Another reason for the problems, she said, is the significant influence of oligarchic groups that regularly underpaid the company, including for freight rates. As Hryshyna said, this has deprived Ukrzaliznytsia of UAH 100 billion over the past five years.
“The state in which Ukrzaliznytsia ended up for now no longer allows it to fully perform the tasks of transporting goods and passengers,” she said.

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LAVINA MALL POSTS UAH 210 MLN OF LOSS IN 2020

Lavina trade center LLC (Kyiv), the owner of Kyiv’s shopping and entertainment center Lavina Mall at 6 Berkovetska Street in Sviatoshynsky district of the capital, over 2020 received a net loss of UAH 210.8 million against a net profit of UAH 125 million in 2019.
According to the company’s statement in the information disclosure system of the National Securities and Stock Market Commission, its revenue decreased by 12.6%, to UAH 761.4 million.
At the same time, last year’s gross profit increased by 16.7% and amounted to UAH 473.4 million, while operating profit decreased by 79.3%, to UAH 114.7 million.
The uncovered loss of Lavina LLC increased 2.6 times, to UAH 338.4 million. Long-term liabilities increased by 56.5%, to UAH 2.52 billion, current – by 26.3%, to UAH 2.48 billion.
The company’s assets for the year increased by 29%, to UAH 5.41 billion.
Lavina LLC was founded in 2013. Its core business is the leasing and operation of own and rented property.

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STATE-RUN UKRZALIZNYTSIA ENDS 2020 WITH NET LOSS OF UAH 11.9 BLN

JSC Ukrzaliznytsia received UAH 11.9 billion in net loss in 2020 (compared to UAH 2.988 billion in net profit in 2019).
Such data are contained in the consolidated financial statements over 2020, released on the company’s website on Friday, confirmed by the leading international audit company Ernst & Young.
According to the company’s website, the result of Ukrzaliznytsia was significantly influenced by a decrease in income from freight and passenger traffic compared to 2019 by 10.3% and 58.3%, respectively, as well as a significant fluctuation in exchange rate differences, as a result of which a net loss was received from exchange rate differences in the amount of UAH 5.5 billion compared to UAH 4.3 billion of net profit in 2019.

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KREMENCHUK STEEL PLANT POSTS LOSS IN 2020

Kremenchuk Steel Plant (Kremenchuk, Poltava region), which is part of the industrial assets of TAS Group, according to preliminary data, in 2020 received a net loss of UAH 22.81 million, while in 2019 its net profit amounted to UAH 66.03 million.
According to the information on the agenda of a general meeting of shareholders of the company scheduled for April 30, published in the information disclosure system of the National Securities and Stock Market Commission, the uncovered loss of the plant by January 1, 2021 amounted to UAH 50.57 million (a year earlier – UAH 27.71 million).
As reported, in 2019, the plant reduced its net profit by 3.2 times compared to 2018.
According to the plant, by the beginning of 2021 its current liabilities amounted to UAH 342.19 million, which is 9.5% more than a year earlier, long-term liabilities decreased by 3%, to UAH 258.74 million.
The company’s assets in 2019 increased by 6.6%, amounting to UAH 854.79 million, in particular total debtor indebtedness rose by 90%, to UAH 240.94 million.
Net worth as of January 1, 2021 amounted to UAH 253.86 million, in particular charter capital – UAH 132.12 million.
Kremenchuk Steel Plant is the leading foundry enterprise in Ukraine for production of steel castings for freight cars and heavy trucks.

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AGRICULTURAL HOLDING MHP ENDS 2020 WITH NET LOSS OF $133 MLN (UPDATED)

Myronivsky Hliboproduct agricultural holding (MHP) received a net loss of $133 million in 2020 versus a net profit of $215 million in 2019, mainly due to exchange rate losses of $204 million due to the annual depreciation of hryvnia by 16%, and the company’s revenue decreased by 7%, to $1.91 billion.
According to the quarterly financial statements of the holding, released on London Stock Exchange on Wednesday, its adjusted EBITDA and operating income decreased by 7%, respectively, to $395 million and $201 million, while the profitability of sales (EBITDA margin) remained at the 2019 level of 21%.
The agricultural holding noted the impact of exchange rate losses in the amount of $204 million on the company’s financial indicators, saying that excluding exchange rate differences, the company’s net profit in 2020 would have been $71 million against $30 million in 2019.
MHP said that in 2020, export revenue decreased by 9.1%, to $1.015 billion, which is 53% of total revenue (56% of total revenue in 2019).
The agricultural holding said that the situation in export markets has deteriorated significantly due to several outbreaks of bird flu in early and late 2020 and the effect of coronavirus (COVID-19) pandemic throughout the year.
In the fourth quarter of 2020, MHP reduced its net loss by 60%, year-over-year, to $24 million, its total revenue decreased by 10%, to $497 million, and export revenue decreased by 19.3%, to $255 million (51% of total revenue).
MHP’s gross profit in the fourth quarter of 2020 increased by 44%, year-over-year, to $75 million, operating profit amounted to $7 million against an operating loss of $2 million, however EBITDA decreased by 10%, to $63 million.
Chief Executive Officer of the company Yuriy Kosyuk said in the statement that the company managed not only to adapt to the serious challenges of 2020, but also to become more resilient and take advantage of new opportunities. He said that as part of the strategic shift announced a year ago towards more customer-oriented products, including with additional processing and added value, for the domestic market of Ukraine and some export markets, the company launched a number of pilot projects for culinary transformation, including Meat Market convenience stores and DönerMarket houses.
“These offerings are at an early pilot stage and I look forward to updating you on progress in due course as this model is rolled-out more extensively over the next several years, transforming the group’s sales […] to a branded value-added base,” Kosyuk said.
According to the report, revenue for the company’s main chicken production segment in 2020 decreased by 5%, to $1.298 billion, and gross profit due to a decrease in meat prices by 30%, to $191 million, EBITDA by 31%, to $194 million. In the fourth quarter, sales in this segment decreased by 3%, to $328 million, while gross profit and EBITDA due to higher prices for cereals fell 66.7%, to $15 million and $14 million, respectively.
In the crop production segment, MHP’s revenue fell by half in 2020 due to a lower harvest, to $134 million, but due to price increases, gross profit increased 3.2 times to $94 million, and EBITDA by 38%, to $150 million.
In meat processing, sales over 2020 decreased by 3%, to $144 million, while gross profit and EBITDA remained at the same level of $19 million and $20 million, respectively. In the fourth quarter, revenue in this segment decreased by 10%, to $38 million, gross profit by 44%, to $5 million and EBITDA by 38%, to $5 million.
At the same time, the company managed to achieve significant improvement in the performance of Slovenian Perutnina Ptuj and its operations in Croatia and Serbia, which are reported as a European operating segment. Its revenue in 2020 increased by 24%, to $335 million, gross profit by 21%, to $93 million, EBITDA by 25%, to $55 million. In the fourth quarter, sales increased by 12%, to $87 million, gross profit by 5%, to $22 million, and EBITDA remained at $15 million.
In terms of other indicators, the company said that its capital investments in 2020 decreased by 30%, to $79 million, available cash from $341 million to $218 million, and net debt increased from $1.139 billion to $1.244 billion.
In its forecast, MHP said the prospects for the development of poultry farming in 2021 will be very difficult, given the ongoing COVID-19 crisis, weak economic conditions, high feed prices, a very active winter season for bird flu and global oversupply, however the company is confident in its business.
“Transformation to a culinary company: MHP is expanding its focus. The experience of global poultry producers supports MHP’s strategic shift to a culinary company. Moreover, we are transforming our relationship with retail, HoReCa and franchisees in order to reach more customers and meet their evolving needs by providing them with new safe and high quality products. Current challenges have led us to accelerate this strategic shift,” the company said in the report.
The company said that its continued vertical integration provides a significantly lower cost base compared to peers in the industry, as well as improved quality control and better biosecurity of poultry stock, and added that the demand for poultry meat is growing globally along with the decline in demand for red meat.
With regard to possible mergers and acquisitions (M&A), the agricultural holding indicates that it continues to monitor global developments and the potential for mergers and acquisitions. “MHP is well positioned to become an active participant in the ongoing consolidation of the industry,” the company said in the report.
MHP is the largest chicken producer in Ukraine. It is also engaged in the production of cereals, sunflower oil, meat products. MHP supplies the European market with chilled half-carcasses of chickens, which are processed, including at its factories in the Netherlands and Slovakia.

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AGRICULTURAL HOLDING MHP ENDS 2020 WITH NET LOSS OF $133 MLN

Myronivsky Hliboproduct agricultural holding (MHP) received a net loss of $133 million in 2020 versus a net profit of $215 million in 2019, mainly due to exchange rate losses of $204 million due to the annual depreciation of hryvnia by 16%, and the company’s revenue decreased by 7%, to $1.91 billion.
According to the quarterly financial statements of the holding, released on London Stock Exchange on Wednesday, its adjusted EBITDA and operating income decreased by 7%, respectively, to $395 million and $201 million, while the profitability of sales (EBITDA margin) remained at the 2019 level of 21%.
MHP said that in 2020, export revenue decreased by 9.1%, to $1.015 billion, which is 53% of total revenue (56% of total revenue in 2019).
In the fourth quarter of 2020, MHP reduced its net loss by 60%, year-over-year, to $24 million, its total revenue decreased by 10%, to $497 million, and export revenue decreased by 19.3%, to $255 million (51% of total revenue).
MHP is the largest chicken producer in Ukraine. It is also engaged in the production of cereals, sunflower oil, meat products. MHP supplies the European market with chilled half-carcasses of chickens, which are processed, including at its factories in the Netherlands and Slovakia.

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