'Half-baked' anti-Russia moves to fail - ag boss

The "half-baked" attempts by Western nations to punish Russia, through sanctions, over its role in the Ukraine crisis are doomed to fail, the head of a leading John Deere seller in the country said, after a tumble in the price of its bonds.

Wolfgang Bläsi - chief financial officer of Ekotechnika, the holding company for Ekoniva-Technika, Russia's largest dealer in foreign-branded farm machinery – said that he was "very sceptical" over the sanctions against Russia by the likes of the European Union and the US working.

"I do not see any reasonable outcome for the Western countries," he said.

"To believe that these half‐baked measures bring Russia to give in cannot be taken seriously."

'Trusting conversations'

The crisis "can be solved only by active co-operation of the Ukrainian government, the EU and Russia," said Mr Bläsi, who is also chief financial officer at Ekosem Agrar, one of Russia's top dairy producers.

"Common trusting conversations instead of sanction spirals and recriminations are the only means to progress here ‐ we are moving ever further away from a solution, every day a bit more."

However, he was optimistic over the situation "stabilising", and of an improved performance at German-based Ekotechnika, which saw its bond rating downgraded to CCC from B by rating agency CreditReform last week, before Russia announced restrictions on imports of food products from the likes of the EU and the US.

"The [import] restrictions have no meaning for us," he told BondGuide.

The downgrade reflected both the risk for companies operating in Russia, as well as the company's widening losses.

Rouble trouble

Instead, it was the weakening of the rouble prompted by the region's ructions, besides the squeeze on Russian farmers' access to loans, which was undermining Ekotechnika, which saw its losses double to E10.6m in the October-to-March period.

The loss was caused largely by a revaluation of inventories of foreign farm equipment, of which the group sells in particular John Deere machinery, to account for a decline in the rouble, which has lost 6% over the past month as regional tensions have revived.

On sales, "when selling machines based on euro or dollar prices, payment at the daily exchange rate will be converted in roubles, so that falling prices lead to higher sales," said Mr Bläsi, also a former chief financial officer at German farm operating KRG Agrar.

In the April-to-October period, the second half of the group's financial year, and a seasonally stronger period for trade, "we expect positive currency effects on the figures, which lead, from today's perspective, to an improvement in results".

Already, in the April-to-June quarter, the group had achieved "good" farm machinery sales, "well above the industry average".

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