The chief executive of Ukrainian dairy processor Ukrproduct has criticised the country's fiscal regime after a higher tax bill weighed on the company's half-year profits.

The UK-listed firm reported a 25.5% drop in net profit to GBP309,000 (US$494,000) for the six months to the end of June.

The fall in profits was due to a jump in the company's tax bill and masked an improved operating performance from the business.

Ukrproduct saw profit from operations climb 13.2% to GBP701,000 in the six months to the end of June. Pre-tax profits were up 19% at GBP524,000. Revenue increased 21.1% to GBP25m.

CEO Sergey Evlanchik praised the company's "strong" operating profit and "significant" increases in sales and volumes but added: "It was ... disappointing that this improved operating performance was undermined by the imposition of the stringent new tax code."

Evlanchik also said Ukrproduct's margins were "under pressure" in the first half of the year due to changes in rules around milk subsidies. He said all processors saw raw-milk costs rise by around 20%.

In the second half of the year, Ukrproduct expects to increase sales through investment in marketing and the launch of more products.

However, the company said the changes to the rules on subsidies would continue to affect margins and said it would look to cut costs "to sustain profitability".

It added: "The onerous new tax situation will require effective planning to offset its impact on the expected improvements in operating profit."