15th Jan 2016 11:58
LONDON (Alliance News) - Ukrproduct Group Ltd on Friday said its earnings before interest, tax, depreciation and amortisation fell significantly in 2015 as a result of cost increases, a decline in volumes and the devaluation of the Ukrainian hryvnia.
The Ukrainian dairy foods and beverages producer said the company faced significant headwinds in 2015 as the Ukrainian economy was under pressure while the east of the country experienced political unrest.
This contributed to the devaluation of the hryvnia, a deterioration in consumer confidence and geographic contraction of the available market, Ukrproduct said, while the closure of the Russian market intensified the local competition.
Ukrproduct said that while revenue in hryvnia terms grew, the overall gross profit in dairy products suffered a significant downturn, caused by rising prices of raw materials. Volumes also contracted as the company sought to manage counterparty risk by stopping selling to customers with weak credit ratings.
Revenue growth in hryvnia terms resulted from increased sales of packaged butter, hard cheese and third-party orders, while processed cheese and bulk and packaged spreads were marginally down on the previous period.
Meanwhile, the company is seeking export opportunities in China and Kazakhstan, which it said will be beneficial to pursue given its currency devaluation.
"Ukrproduct's business is being reset to operate successfully in a very challenging market place. To that end a comprehensive review programme of the business operations and practices is underway. Given the volatile environment the working capital and capital expenditure are subject to day-to-day monitoring and stringent control," Ukrproduct said in a statement.
"Undoubtedly, there is more to do to ensure that Ukrproduct's business adapts to and is synchronised with current market conditions but we are pursuing a structured plan to return to profitability," it added.
Shares in Ukrproduct were trading down 15.4% at 2.75 pence on Friday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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