20 March 2016
Total revenues in EUR terms declined by about 34% vs. previous year to EUR 191M, driven by import ban on Ukrainian and EU dairy production imposed by Russian government since mid-2014 (Milkiland has been one of the leading cheese exporters from Ukraine to Russia), devaluation of both countries national currencies and declining world dairy prices (so that weak international demand on dry milk powder and skimmed milk powder).
Over 50% of total Milkiland sales was provided by its Russian subsidiary – Ostankino plant, which mainly produces and realizes on local market whole-milk products (revenues of Ostankino grew by 4% in RUB terms, but declined by 22% in EUR because of RUB devaluation in reporting period). During the whole Y2015 EBITDA margin of this direction made 8.5% (which means decrease in last quarter, as in 9m2015 it was at more than 9.5%).
Realization Ukrainian part of the group declined by 20% in UAH and 55% in EUR terms, main reasons are absence of cheese export into Russia (approximately EUR 14M in Y2014, EUR 70M in Y2013) and decrease of local WMP realization. The company tries to increase its share on domestic cheese market, at that potential is restricted mainly in a view of fall in purchasing power of Ukrainian population.
Having problems on the target markets, Milkiland tries to develop new export destinations – mainly China (targeting supplies of dry milk products) and EU (mainly for butter and dry milk products) markets. At that currently main export destination for the Group is Kazakhstan (56% of revenues in segment).
Profitability of Milkiland operations in Y2015 further declined – in Y2015 preliminary EBITDA made EUR 9.6M with EBITDA margin at 5% (which, comparing to 9m2015 results, effectively means zero EBITDA for Q4). In Y2014 EBITDA of the company comprised EUR 17.1M (with margin slightly higher at 6%).
The company is still in restructuring process with financing banks, so its future situation will be highly dependent on results of this restructuring (bank debt as of 30/09/15 made EUR 105.5M).