Ukrproduct Group, the UK-listed Ukrainian dairy business, has suspended operations at one of its factories following Russia’s invasion of the country.
The company has halted operations at its plant in the north-central city of Zhytomyr, where it produces processed cheese and the fermented drink kvass which is popular in eastern Europe.
Operations continue at Ukrproduct’s two other manufacturing facilities, which are located around 100 miles west of Zhytomyr in Starokostiantyniv and 100 miles further south in Letychiv.
However, in a statement on the UK’s AIM stock exchange today, on which Ukrproduct is listed, the company said the two facilities have “been affected by the invasion of the country”.
Its statement said: “The Starokostiantyniv plant, where Ukrproduct produces the bulk of its products and in particular packaged butter, spreads, hard cheese and skimmed milk powder, is currently operating at approximately half of its normal volumes for this time of year. Deliveries have been affected due to military activity on the roads and nightly curfews. As will be appreciated, the financial impact of the invasion will be negative on the company but it is too early at this stage to estimate the extent of that impact.”
Ukrproduct Group said it is taking “all measures available to protect and safeguard its personnel and business and that it will make further announcements as appropriate”.
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In 2020, the last full financial year for which Ukrproduct has published financial results, the company generated revenues of GBP55.5m (US$74m), an increase of 11.1% year-on-year. It made a net loss of GBP1.2m, against a net profit of GBP2m in 2019.
In September, Ukrproduct posted financial results for the first six months of 2021. Revenue in local currency increased by 7.3%. However, due to the devaluation of the Ukrainian hryvnia against sterling, revenue dropped 7.2% to GBP25.5m on a like-for-like basis. The firm made a net profit of GBP151,000.
Yesterday, MHP, the Ukraine agri-food group that is also listed in London, outlined the effects the conflict is having on its business.
MHP, which accounts for around half of Ukraine’s commercial poultry production and a third of consumption, has “encountered significant difficulties with its supply chain”, executive chairman Dr John Rich said, adding the situation has “inevitably … causing the company to incur significant unplanned losses”.