Dairy weakness, hrynia slump dent Astarta profits

Astarta Holding, one of Ukraine's biggest agribusinesses, said that its dairy operations had been hurt by the country's crisis, but downplayed the threat to its other divisions £ despite unveiling a 93% slump in profits.

The sugar-to-cereals group unveiled earnings of E3.46m for the first half of the year - down from E52.3m a year before.

However, with revenues rising 14.5% to E188.0m in revenues, Victor Ivanchyk, the Astarta founder and chief executive, termed the results "encouraging" nonetheless, with the loss down to a non-cash E78.0m foreign exchange loss reflecting the 50% slump in the hryvnia this year.

Mr Ivanchyk said that the group's own operations - "located far from the sites of battle" in eastern Ukraine, where separatists are fighting government forces £ were continuing business "uninterrupted".

Sugar, grain results

In its crop growing unit, the group achieved a small rise to 5.0 tonnes per hectare in its wheat yield, and a 60% jump to 4.8 tonnes per hectare in its barley yield, with lower prices blamed for a 32% drop to E31.0m in divisional revenues for the half year.

In sugar, historically Astarta's top earner, revenues were flat at E93.7m, with a recovery in sugar prices making up for a 13% drop in sales volumes.

"Russia's ban on food imports from Ukraine will have little or no-impact on the sugar business in Ukraine because the Russian sugar market has been closed to Ukrainian producers for several years as a result of high import duties," the coopany said.

The group also highlighted initial revenues of E41.5m from its soybean processing plant opened in Globyno in east central Ukraine at the start of the year.

Dairy setback

However, Astarta acknowledged that Russia's ban on dairy imports from Ukraine, and the regional tensions, had undermined its beef and dairy farming division, which fell to a loss of E10.9m, compared with earnings of E1.90m a year before.

"Ukrainian hryvnia depreciation, [the] Russian import ban on Ukrainian cheese, and [the] decline in living standards following the deteriorating economic situation hurt this segment the most," the group said.

While both production and sales rose 14% by volume, lower milk prices, in euro terms, left divisional revenues down 7.0% at E18.3m.

'Much tighter credit conditions'

The group also acknowledged the threat to its prospects from the Ukraine crisis, and impacts such as the halving in the hryvnia against "major foreign currencies" and a foreign exchange controls.

"The international rating agencies have downgraded sovereign debt ratings for Ukraine.

"The combination of the above events has resulted in a deterioration of liquidity and much tighter credit conditions where credit is available."

Astarta shares, which are listed in Warsaw, rose 0.8% to 38.00 zloty in morning deals.

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