Ukrproduct Group Ltd Trading update (3565V)
27 January 2017 - 11:59PM
UK Regulatory
TIDMUKR
RNS Number : 3565V
Ukrproduct Group Ltd
27 January 2017
FOR IMMEDIATE RELEASE January 27, 2017
TRADING UPDATE
Kyiv, Ukraine - January 27, 2017 - Ukrproduct Group Limited
("Ukrproduct" or the "Group") (AIM: UKR), one of the leading
Ukrainian producers and distributors of branded dairy foods and
beverages (kvass), today announces the following trading update for
the year ended 31 December 2016.
During 2016 Ukrproduct has continued to face the headwinds
induced by the political situation and the Ukrainian economy.
Currency weakness continued with a contracted geographic market
place and intense competition. Consumers are low in spending power
and confidence.
In this challenging context Ukrproduct's response is to focus on
cash: ensure its product offering is competitive; focus on
customers affording acceptable margins and therefore on cash
production. Ukrproduct seeks further to underpin the trading effort
with productivity/cost improvements.
Trading
As to be expected, overall volumes fell although revenues
improved given product mix and price inflation. Gross margins in
most product lines improved apart from skimmed milk powder.
Branded products were given more focus with key categories
butter and spreads showing improved volume and margins. Margins on
processed cheese were maintained on slightly lower revenues.
Private label made improved gross profits on significantly reduced
volumes as marginal contracts were terminated. Those
retained/developed reflected the quality demanded by the retailer
and commensurate margins. The kvass beverage continued to make a
strong gross profit contribution. This category offers
opportunities and the product offering has been extended with white
kvass and healthy rose hip drinks being test marketed.
The exchange rate depreciation has facilitated development of
the export business not least to CIS countries. More recent growth
of domestic dairy prices in the Ukraine has provided some
constraint.
Skimmed milk powder has been a negative in terms of available
prices being historically low across the world, particularly in the
first half. Spare capacity at our Starokonstantyniv facility has
however afforded opportunities for profitable contract
processing.
In 2016 Ukrproduct maintained its approved supplier status with
a major international company, confirming that the company's
products meet high international quality requirements.
Finances
Whereas overall volumes fell in 2016, revenues improved. In
difficult markets gross margins generally showed some improvement,
subject to skimmed milk powder which returned a shortfall in excess
of GBP0.6m year on year.
.
However given significant cost reductions, EBITDA improved by
several points into positive territory. This was encouraging and
although the Group expects to report a loss for the year this will
be sizably lower than in 2015.
Cash in such trading circumstances continues to be the focus.
Along the lines mentioned the Ukrproduct trading model is cash
oriented not least through release of working capital. This is
allowing ongoing servicing of its debt obligations, including
interest payments to EBRD under the terms of the more favourable
debt restructuring agreement signed last June.
Outlook
Ukrproduct will continue to work towards profitability whilst
delivering positive cash flow. Plans as defined above delivered
improved performance in 2016 will be further implemented.
Management agility will be required in the febrile market place but
confidence has risen not least as also has the Ukrainian
economy.
***
For further information, please visit www.ukrproduct.com or
contact:
Ukrproduct Group Ltd
Jack Rowell, Non-Executive Tel: +380 44 232 9602
Chairman
Alexander Slipchuk, Chief Executive www.ukrproduct.com
Officer
ZAI Corporate Finance Ltd.
Nominated Adviser and Broker Tel: +44 20 7060 2220
Peter Trevelyan-Clark, Jamie www.zaicf.com
Spotswood
This announcement contains inside information for the purposes
of Article 7 of EU Regulation 596/2014.
Ukrproduct Group Ltd is one of the leading Ukrainian producers
and distributors of branded dairy
products and kvass, a traditional fermented beverage. The
Group's product portfolio includes
processed and hard cheese, packaged butter, skimmed milk powder
(SMP) and kvass. Ukrproduct has built a range of recognisable
product brands ("Our Dairyman", "People's Product", "Creamy
Valley", "Molendam", "Farmer's") that are well known and highly
regarded by consumers. The Group reported unaudited consolidated
total assets of approximately GBP 13.8 million as at June 30, 2016
and unaudited consolidated revenues of approximately GBP 8.2
million for the six months then ended. In its full year ended 31
December 2015, the Group reported audited revenues of approximately
GBP 22.2 million. Ukrproduct's securities are traded under the
symbol "UKR" on AIM, a market operated by the
London Stock Exchange.
Some of the information in this press release may contain
projections or other forward-looking statements regarding future
events or the future financial performance of the Group. You can
identify forward looking statements by terms such as "expect,"
"believe," "anticipate," "estimate," "intend," "will," "could,"
"may" or "might" the negative of such terms or other similar
expressions. These statements are only predictions and they may
differ materially from the actual events or results. We do not
intend to update these statements to reflect events and
circumstances occurring after the date hereof or to reflect the
occurrence of unanticipated events. Many factors could cause the
actual results to differ materially from those contained in such
projections or forward-looking statements, including, among others,
general economic conditions, our competitive environment, risks
associated with operating in Ukraine, rapid technological and
market change in our industry, as well as many other risks
specifically related to the Group and its operations.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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January 27, 2017 07:59 ET (12:59 GMT)