The Milkiland Group, the assets of which are located in Ukraine, Russia and Poland, suffered € 2.5 million loss in the first half of 2018 after a € 1.5 million profit for the same period last year.
According to a report on the Warsaw Stock Exchange, the revenue of the group decreased by 11% to € 66.2 million, EBITDA fell by 29%, to € 3.5 million.
In “Milkiland” they explain that during the reporting period they managed to increase sales volumes in all segments. This was facilitated by the restoration of consumer demand, as well as effective international trade in butter and dry milk.
However, the depreciation of the Ukrainian hryvnia and the Russian ruble led to a decrease in revenues in all segments, except for cheese and butter.
In the first half of the year, there was a growing international demand for Ukrainian butter, as recently in the markets of developed countries nutritionists sad ‘yes’ to milk fat and consumers began to eat it instead of homogenized products. Thus, the revenues from butter exports of the group were increased by one and a half times, both in value and in natural terms.
During the same period, the revenues from cheese exports doubled.
But the export, for example, of dry skim milk reacted to the slowdown in global demand and decreased by half in annual terms.
In the context of the countries for the first half of the year, Milkiland managed to increase sales in Ukraine by 4.6% (up to € 17.7 million), in Poland – by 35% (up to € 7.4 million). But the proceeds from the sale of products in Russia fell by 17% and amounted to € 40 million.
The reduction in EBITDA in the group is attributed to the same devaluation of the national currency. In the Russian business segment, the reduction was 41%. The EBITDA in Ukraine fell by only 18%.
The Polish segment showed negative EBITDA (- € 0.01 million). This happened after a decline in cheese production at the Ostrowia plant due to the cancellation of the tolling contract with the German company. And also, due to lower prices for dairy products in the country.
At the same time, the company states that during the period it managed to cut administrative expenses by 22%. The same was true of the cost of servicing bank loans.
Also, an additional € 3.3 million was obtained due to exchange rate differences. But, despite this, Milkiland failed to avoid losses.
We recall, according to the results of the first quarter of 2018, “Milkiland” earned € 2.4 million net profit, which is twice as much as in the same period last year.
The group is one of the largest producers of dairy products in the Ukrainian market. Its production capacity in Ukraine, Russia, Poland can process 1.33 million tons of milk per year. In Ukraine, Milkiland owns 10 plants.