Business news from Ukraine

CREDIT AGRICOLE BANK SEES NET PROFIT RISE BY 18% IN UKRAINE 2019

The net profit of Credit Agricole Bank (Kyiv) in 2019 amounted to UAH 1.73 billion, which is 18%, or UAH 267 million more than in 2018, the bank’s website reports.
At the same time, the bank’s net profit for the fourth quarter of 2019 amounted to UAH 398 million, which is 43% more than the same indicator a year earlier (UAH 278 million).
The bank’s net interest income for 2019 increased by 7% and amounted to UAH 2.48 billion.
In 2019, the bank’s assets increased by 8%, to UAH 35.3 billion, in particular loans and customers’ debts by 5%, to UAH 25.06 billion, as well as investments and securities by 46%, UAH to 1.46 billion.
The bank’s liabilities since the beginning of the year have grown by 5%, to UAH 30.15 billion, while subordinated debt decreased by 36%, to UAH 679 million.
The bank’s net worth in 2019 rose by 23% and amounted to UAH 5.16 billion.
Credit Agricole Bank was founded in 1993. Its sole shareholder is Credit Agricole S.A. (France).
Credit Agricole Bank ranked 11th among 76 banks operating in the country as of October 1, 2019 in terms of total assets (UAH 38.111 billion), according to the National Bank of Ukraine.

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STATE-RUN NAFTOGAZ SEES CONSOLIDATED NET PROFIT RISE BY 27%

Naftogaz Ukrainy Group in January-September 2019 increased its consolidated net profit by 27.4% (UAH 4.578 billion) compared to the same period in 2018, to UAH 21.309 billion. “Pretax profit in the nine months of 2019 amounted to UAH 28.9 billion, which is 26% more than for the same period last year. This result occurred mainly due to the performance of the Natural Gas Transit and Integrated Gas Business segments,” the report says.
According to the statements posted on the company’s website, its sales revenue in January-September 2019 decreased by 3.7% (by UAH 6.36 billion), to UAH 165.308 billion, while gross profit increased by 10.6% (by UAH 5.164 billion), to UAH 53.848 billion.
In terms of geography of sales revenues, the largest share fell to domestic revenues with UAH 106.748 billion against UAH 113.236 billion in January-September 2018, the Russian Federation (UAH 55.977 billion and UAH 55.931 billion), Europe (UAH 2.31 billion and UAH 2.109 billion), and Egypt (UAH 273 million and UAH 392 million).
Naftogaz Ukrainy unites the largest oil and gas producing enterprises of the country. The group is a monopolist in transit and storage of natural gas in underground gas storage facilities, as well as in the transportation of oil by pipeline through the country.

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STATE-OWNED UKRSPYRT POSTS NET PROFIT IN 2019

State-owned enterprise Ukrspyrt in January-September 2019 received UAH 17.15 million in net profit, or 81% of the plan.
According to the published results of the unscheduled audit of the company, the income of Ukrspyrt for the first nine months of this year amounted to UAH 1.24 billion, or 89% of the plan.
In 2018, Ukrspyrt received UAH 21.61 million in net profit (60% of the plan) and UAH 1.86 billion (76% of the plan) of revenue, according to the audit report.
In addition, during the audit, it was determined that the provision of discounts by the state-owned enterprise on the price of alcohol was non-transparent, as a result of which Ukrspyrt saw a shortage of UAH 119.78 million.
In 2018, Ukrspyrt allocated UAH 112.36 million for maintenance of 15 non-performing enterprises, UAH 80.19 million for the nine months of 2019.
During 2018 and in the nine months of 2019, auditors recorded excess consumption of fuel and energy resources by individual plants for a total amount of UAH 19 million. It was also found that the purchase price of grain crops for the production of alcohol was overstated for a total amount of UAH 8.17 million.

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DTEK ENERGY SEES NET PROFIT RISE BY 1.9 TIMES DUE

DTEK Energy in January-September 2019 increased its net profit by 85.4% (UAH 2.899 billion) compared to the same period last year, to UAH 6.294 billion, the report on the company’s website said.
DTEK Energy’s revenue for the nine months decreased by 39.7% (by UAH 47.523 billion), to UAH 72.289 billion, gross profit by 17.7% (by UAH 2.551 billion), to UAH 11.873 billion.
For the nine months, the company invested UAH 4.2 billion in production, and paid UAH 11.6 billion in taxes to the budgets of all levels.
The company told Interfax-Ukraine that profit growth against the background of a decrease in income is associated with the strengthening of the hryvnia exchange rate, due to which net profit was received.
“In total, net profit amounted to UAH 6.3 billion, which corresponds to the indicator of exchange rate differences, which are not a monetary operation. Thus, the company’s production activity did not show a positive financial result. This is due to the development of the regulatory system for a new model of the electricity market, which today offers great preferences to foreign manufacturers,” DTEK said.

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DANISH PIG BREEDING COMPANY GOODVALLEY SEES 1.8-FOLD RISE IN NET PROFIT

The Danish pig breeding company Goodvalley (previously Danosha) with assets in Ukraine, Poland and Russia, saw DKK 120 million in net profit in January-September 2019, which is 1.8 times more than a year ago. According to a company report, revenue over the period grew by 1.7%, to DKK 1.12 billion, adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) fell by 2.6%, to DKK 185 million.
In Q3 2019, the net profit of the company was DKK 26 million compared with DKK 21 million of net loss a year ago. Revenue grew by 9.8%, to DKK 414 million thanks to the increase in sales of live pigs at higher average price.
Adjusted EBITDA in Q3 2019 doubled, to DKK 71 million.
Ukrainian segment revenue rose to DKK 138 million (DKK 108 million in Q3 2019) thanks to growth in pig prices, while adjusted EBITDA fell to DKK 15 million (DKK 17 million in Q3 2018) due record-low crop yield.
“Our pig production generated strong results in the quarter as we lev¬eraged our recent investments in production capacity, enabling us to sell more live pigs at a higher average price while simultaneously improving operational efficiency slightly. Even though we realised a record-low crop yield from our land in Ukraine in particular and saw the pig price effect partly offset by relatively fixed pork product sales prices, we now expect to reach the high end of our revenue and earnings outlook for the full-year,” CEO Hans Henrik Pedersen said.

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LARGE UKRAINIAN AGRICULTURAL HOLDING KERNEL POSTS 24% FALL IN NET PROFIT

Kernel, a large Ukrainian agricultural holding, saw $59.61 million in net profit in the first quarter of FY2020 (July 2019 – June 2020), which is 24% less than in the first quarter of FY2019 over the IFRS 16 impact.
According to a report of Kernel Holding S.A. (Luxembourg) on Wednesday, revenue reduced 26% year-over-year to $845.84 million, stemming from lower trading volumes.
However, earnings before interest, taxes, depreciation and amortization (EBITDA) added 6% year-over-year to $106.5 million driven by Oilseed Processing segment EBITDA small growth.
In particular, Oilseed Processing segment EBITDA reached $22 million (up 38% year-over-year). Infrastructure and Trading segment generated $35 million EBITDA, 8% decline year-over-year. Unallocated corporate expenses in the reporting period amounted to $9 million, up 40% year-over-year.
The company said that the general outlook for the segment’s performance in FY2020 remains positive. Kernel expects Infrastructure and Trading business to be the largest contributor to group’s EBITDA in FY2020 owing to: commissioning of new grain export terminal scheduled for January 2020; growing grain export volumes; and strong contribution of grain railcars business.
Kernel said that at the date of this report, we completed this year harvesting campaign on 513,000 hectares, reaching record ever net yields for wheat (5.9 tonnes per hectare, up 16% year-over-year) and sunflower (3.5 tonnes per hectare, up 11% year-over-year), while facing normalization of corn yields to 8.6 tonnes per hectare (down 13% year-over-year).
“For the whole FY2020, we expect over $100 million farming EBITDA (net of IAS 41 and IFRS 16 effects), weakened by corn yield decline, lower year-over-year grain prices and growing production costs enhanced by local currency appreciation,” the group said.
Kernel’s gross profit in Q1 FY2020 fell by 9.9%, to $85.85 million, and operating profit – by 0.5%, to $82.09 million.
Net debt as of September 30, 2019 reached $1.144 billion, up 65% from June 30, 2019 level, reflecting short-term borrowings increase to finance working capital needs at the beginning of the season as well as $307 million new lease liabilities added to the balance sheet after implementation of IFRS 16.
Readily marketable inventories (RMI) increased by $275 million over Q1 FY2020, to $568 million, driven by procurement of grain and sunflower seeds.
Consequently, net debt adjusted for RMI increased to $576 million on September 30, 2019 from $400 million on June 30, 2019, with growth solely arising from IFRS 16 introduction. As a result, Kernel leverage as of September 30, 2019 increased to 3.3x Net-debt-to-EBITDA and 3.7x EBITDA-to-interest (post IFRS 16).

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