APK-Invest profitability restored as Ukraine armed conflict subsides

By Vladislav Vorotnikov

- Last updated on GMT

The stabilisation in Donetsk Oblast has made APK-Invest consider new investments
The stabilisation in Donetsk Oblast has made APK-Invest consider new investments

Related tags: Ukraine, Pork

Ukraine’s largest pork producer APK-Invest earned UAH65 million ($2.5m) of net profit in 2015, compared with UAH103 million ($4m) of net losses in 2014.

The profit rise came as the armed conflict in the east of the country entered into a calmer period allowing the company to stabilize its operation, according to the latest report from the company.

Last year APK-Invest sent 519,860 heads of pigs for slaughter, producing 42,000 tonnes of pork, a 7% increase on 2014. Production of sausages increased by 14% to 5,460 tonnes. Overall, APK-Invest accounts for 22% of Ukraine’s industrial pork production.

Impact of ATO

In 2014 executives of APK-Invest reported numerous problems with the company’s operations following the start of the anti-terrorist operation (ATO) conducted by the Ukranian government in the Donetsk Oblast region, which has suffered heavy fighting between government troops and anti-Russian rebels. Most of the company’s assets are located in the area.

The main problem faced by the company has been loss of access to the market of Donetsk and Luhansk Oblasts,​” stated APK-Invest CEO Roman Raspopov.

Another problem is interruption of water supply, as due to the fighting we have had to bring water from other regions of the country, which has cost more than ten times higher,​” he added.

In addition, during 2014 APK-Invest suffered several cases of armed assault, in which unidentified criminals stole several units of agricultural equipment and caused damaged. As the result, in July of that year the owner of the company, Boris Kolesnikov, warned the company might have to stop production of pork.

New reality

However, it seems the company has now put these problems behind it. Since the end of 2015, it has restored the water supply and regained access to the fields in Donetsk Oblast for the collection of feed crops. Roman Raspopov has suggested that with the stabilization of the situation, APK-Invest may even consider new investments in the operation.

Since February 2015, active fighting between government and rebel troops has ceased, giving local businesses the chance to get back to normal. At the same time, local authorities say trade channels in the east of the country remain interrupted.

APK-Invest still cannot deliver pork to the regions controlled by rebels. Also, since the beginning of the year, it has lost access to the Russian market as well as the Crimean market due to the food embargo. As the result, 2016 may prove more difficult than 2014,​” said an unnamed representative of the local authorities.

Food supplies remain an important issue for Ukraine. According to a recent UN report, 1.5 million of the country’s citizens face the threat of food shortages due to the armed conflict, with nearly 300,000 struggling against hunger right now and in urgent need of help.

Related topics: Meat

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