Ukrproduct sees net profit of GBP 0.15 mln in H1 2021

KYIV. Sept 27 (Interfax-Ukraine) – Ukrproduct Group, a large Ukrainian producer of packaged butter and processed cheese, saw GBP 0.15 million in net profit in the first half of 2021 versus GBP 0.45 million in net loss in the first half of 2020, owing to the positive exchange difference of GBP 0.37 million versus negative GBP 0.67 million in the same period last year.

According to unaudited interim financial results for the six months ended June 30, 2021 posted on the London Stock Exchange on Monday, Ukrproduct’s revenue for the reporting period decreased 7.2% to GBP 25.53 million, gross profit fell by 9.8% to GBP 2 million, and EBITDA – by 37.2%, to GBP 0.49 million

Ukrproduct received GBP0.05 million in operating loss in January-June 2021 versus GBP 0.49 million in operating profit in January-June 2020.

The company said that consolidated revenue of the group in local currency increased by 7.3%, growth in volume stood at 8.1%.

"The Group significantly changed the product portfolio and sales structure compared to the prior half a year in order to support the product margins: a significant rise in revenue of 71.1% was provided by processed cheese and associated product (with its market share increasing from 22% to 41%), while the revenue from butter decreased by 42.6% as the Group reoriented from the mass towards the premium market (with its market share decreasing from 33% to 21%)," the company said in the report.

Commenting on the deterioration of gross and operating profit, the company names the rise in prices for milk by 24%, palm oil by 30% and energy resources among the reasons.

Ukrproduct said that its net assets for the year increased 2.2 times, to GBP 5.7 million.

The company said that in the first half of 2021 it was in breach of several provisions of the loan agreement with the European Bank for Reconstruction and Development (EBRD) and in June entered discussions with the EBRD to potentially restructure the loan repayment schedule as a result of pressure on the working capital requirements of the business owing to increased raw materials costs and growing working capital requirements as the Group significantly increased its sales via retailers as a result of the COVID-19 related restrictions imposed on the other distribution channels during a number of consequential lockdowns.

"The group’s management continues to have discussions with EBRD and, at present, EBRD has taken no action to accelerate repayment of the loan," the company said. Ukrproduct added that the company is hopeful that an agreement can be reached in due course that works for both parties, the management is seeking to secure sufficient additional funding from the local banks to refinance the existing loan on more competitive terms.

The company said that on September 3 it made the repayment of the overdue (by 1 June 2021) principal in the amount of EUR 106,200 settled the due interest amount of EUR 28,580, but informed the EBRD that it could not undertake the next repayment at the amount of EUR 294,006 that was due on September 1, 2021.

"The development of the business in the second half of 2021 remains highly uncertain due to ongoing COVID-19 pandemic and further inflation in prices of agriculture commodities worldwide in the second half of the year," the group said. According to the report, the company expects its margins to experience further pressure until the end of this year.

Ukrproduct Group is a large Ukrainian producer and distributor of branded dairy foods and beverages (kvass).