Ukrros to idle one sugar mill due to anticipated beet shortage

Ukrros (UROS: BUY) will freeze production at its Gubinikhskiy Sugar Mill (Dnipropetrovsk region), which represents 20% of the company’s capacity, due to an anticipated deficit of sugar beets this year, Supervisory Board Chairman Serhiy Fedorenko told Interfax in an interview yesterday. According to the Ukrainian Association of Sugar Producers, about 30 domestic sugar mills (29% of those in operation last season) are expected to be idled due to a sharp reduction in land sowed with sugar beets in 2008. Olha Pankiv: Ukrros’ decision to idle this sugar plant comes a week after the Agrarian Ministry announced that land sowed with sugar beets is down 32% yoy to 402 ths ha in 2008. The situation with beet cultivation looks worse than we expected and benefits those sugar makers with significant supplies of their own beets, including Astarta (AST PW: U/R) and Dakor (DAKOR: BUY), while our projection for Ukrros to increase sugar sales by 25% in 2009 are under threat. Ukrros would be able to make up the difference in the next few years if it successfully pursues a strategy of boosting its land under cultivation.