Business Briefs
Apr 1, 2009 at 21:59METRO posts 1 billion euro sales in Ukraine
METRO Cash & Carry, the Dusseldorf, Germany-based retailer, announced in a March 24 statement that its 2008 sales in Ukraine accounted for just over 1 billion euros, increasing by a whopping 24 percent year-on-year.
Global sales also grew by 4.6 percent, to 33 billion euros. “We are satisfied with our business development in 2008. METRO Cash & Carry consequently strengthened its leading position in self-service wholesale,” said Frans Muller, CEO of METRO Cash & Carry International and board member at parent corporation, METRO Group.
In 2008, METRO added five new stores in Ukraine: a second store in Odessa, two more stores in Makiyivka and Mariupol of Donetsk Oblast, as well as stores in Ivano-Frankivsk and Simferopol. The new stores created nearly 1,500 new jobs. Its investment into the Ukrainian economy is estimated at 80 million euros. Having invested 460 million euros into Ukraine since entering the market in 2003, the company currently operates 23 stores in 18 cities and claims to have created almost 7,000 new jobs.
“Despite the current economic crisis in Ukraine, we still intend to open two more stores in 2009,” said Axel Hluchy, managing director of METRO Cash & Carry Ukraine. The opening of a fourth store in Kyiv is pending this month.
Russians launch stock exchange in Ukraine
The Ukrainian Exchange, a joint venture between Russia’s RTS stock exchange and leading Ukrainian investment banks, announced on March 26 the launch of Ukraine’s first electronic equity exchange.
In a statement, officials promoted their new stock trading platform as a “direct market access” system to provide investors with access to trading Ukrainian securities from any location. Brokers said the new system means competition for the PFTS, which has been the main trading platform for Ukrainian securities. The Ukrainian Exchange was established in May 2008, with authorized capital of Hr 12 million. Russia’s RTS holds a 49 percent stake in the company with 51 percent belonging to 21 Ukrainian brokerage companies. Around $10 million is expected to be invested into the project within three years.
“In today’s difficult economic situation, Ukrainians are in need of new investment opportunities. The stock trading system will allow investors to trade in the most liquid local stocks on the order-driven market with minimum transaction risks, i.e., in the anonymous order book with 100 percent advance depositing of assets,” said Roman Goryunov, RTS’s CEO.
Oleh Tkachenko, Ukrainian Exchange CEO, added: “The Ukrainian Exchange will finally make stock market trading accessible to individual investors all over the country.”
UniCredit plans cuts in Ukraine, Kazakhstan
Italian banking group UniCredit will cut as many as 1,400 jobs in Ukraine and Kazakhstan, Bloomberg reported on March 25, citing Die Presse newspaper.
Federico Ghizzoni, head of the bank’s Eastern Europe unit, said in the report that between 600 and 700 jobs in each Ukraine and Kazakhstan will be cut. The bank’s investment in the two countries will “be worth it” in the long term, Ghizzoni was cited as saying.
Ukrtelecom starting price set at $3.2 billion
Ukraine’s State Property Fund on March 24 set a $3.2 billion starting price for the privatization of a 68 percent stake in fixed-line telephone monopoly Ukrtelecom. The price tag is higher than what analysts had expected, citing depressed asset valuations in the wake of the global financial crisis.
Facing a budget shortfall, Prime Minister Yulia Tymoshenko’s government is desperate to raise cash from privatization. It tried last year to privatize Ukrtelecom that owns the whole of the country’s backbone network, and is considered one of the nation’s most prized assets. But the sale was blocked by President Victor Yushchenko. Earlier this year, Yushchenko criticized plans to privatize Ukrtelecom, saying investors' interest would be weak due to the recession. But Dmytro Parfenenko, head of the privatization agency, said about 10 companies had expressed interest in bidding, including foreign banks and telecoms, in addition to Russian and domestic business groups.
There are signs that the president is changing his position. Oleksandr Shlapak, deputy head of the presidential office, said last week that Ukrtelecom’s privatization could proceed if certain conditions were met.
“We see this statement as a sign of President Victor Yushchenko’s weakening resistance against Ukrtelecom’s privatization, which slightly increases the chances that it could take place this year,” said Peter Keller, an expert at investment bank Troika.
Analysts say Ukrtelecom’s value and market share has gradually withered away in recent years. The company, ineffectively managed by state authorities, has increasingly found it hard to compete with private telecom groups that have offered mobile telecommunications at increasingly affordable rates. “In the current conditions, Ukrtelecom is losing its positions, so a mechanism needs to be found to correct this. Today, it has about 18 percent of the market. I think that private business works better in this segment, and world experience confirms this,” said Yosyp Vinsky, who heads Ukraine’s transportation and telecoms ministry.
In a February note to investors, Dragon Capital said Ukrtelecom reported net sales of $1.25 billion in 2008, or 7 percent down year-on-year. The company reported an EBITDA (earnings before interest, taxes, depreciation and amortization) of $219 million during this period, or 44 percent down year-on-year.
Buzzi’s Russia, Ukraine projects hit by cuts
Italian cement maker Buzzi Unicem has put on hold projects in Russia and Ukraine as part of capital expenditure cuts in response to the global crisis, according to a March 25 report by Reuters.
Italy’s No. 2 cement maker, with activities also in the United States and Mexico, plans to cut maintenance and capital expenditures by 5.6 percent this year and by 39 percent in 2010.
“We decided to postpone the Greenfield Akbulak project in Russia and the Brownfield Volyn project in Ukraine,” Reuters reported, citing comments by chief executive officer Pietro Buzzi. “(We’re) ready to put the projects back on track as soon as we see the light at the end of the tunnel,” Buzzi said.
JKX profits up, shares down amid Russia delay
JKX Oil and Gas, a London-listed hydrocarbon company with its main production unit in Ukraine, said a Russian gas project would start up later than expected, according to a March 27 report by Reuters.
JKX said its Koshekhablskoye field in Russia would now start up in the fourth quarter of 2010, which will weigh on production and earnings in the coming 18 months. The company had originally hoped to start the field in 2008 but said last August the need for a more extensive overhaul of equipment at the facility would delay it into this year.
“The delays in the start up of the Russian project into 2009 are disappointing,” Keith Morris, oil analyst at Evolution Securities.
Gas prices are regulated in Ukraine, where JKX’s production is focused, but the January standoff with Russia led to higher import prices. This led to a 28 percent increase in the price JKX receives for its gas. Paul Davies, JKX's chief executive officer, said he expected this level to hold througout 2009.