24th Sep 2014 11:06
LONDON (Alliance News) - Ukrproduct Group Ltd posted a swing to a pretax loss in the half-year to the end of June, as the ongoing instability in Ukraine weighed heavily on its results.
The Ukrainian producer and distributor of dairy foods and beverages posted a pretax loss of GBP2.0 million, swung from a profit of GBP145,000 in the previous year, as revenue fell to GBP17.2 million from GBP24.7 million.
The company said that, as to be expected given the political and economic instability in the country, consumer confidence has fallen, and the populations' purchasing powers have been hit by the significant increases in fuel prices due to deteriorating relations between Ukraine and Russia.
The devaluation of the Ukrainian hryvnia has compounded these issues, increasing the cost of imported materials.
In dairy, the lack of exports to Russia led to oversupply and some dumping in the domestic market, although it led to improved milk availability, said the company. Branded dairy products saw lower sales, although profit margins were improved by the milk availability and consumer price increases.
In butter, the company saw volumes and revenues decline despite improved margins, and spreads continued to decline as consumers changed their preferences back to butter.
Processed cheese saw revenue and profit decline, and hard cheese sales were heavily affected by export restrictions to Russia.
Skimmed Milk Power showed growth compared to the previous year due to higher domestic and export demand, and better prices given the exchange rate. Kvass sales declined due to colder summer, and difficulties selling into Crimea. The company expects the second-half of the season to see improve sales.
The company said that, in the context of the unstable environment, it will focus on restoring branded product volumes with a strong marketing programme.
Shares in Ukrproduct were trading 10.7% lower at 8.00 pence per share Wednesday.
By Hana Stewart-Smith; [email protected]; @HanaSSAllNews
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