Business as usual for Luhanskteplovoz, Donetsk SCM in remote regime

The leading CIS producer of diesel locomotives, Luhanskteplovoz (LTPL UK), is working in its usual mode despite the tense situation in Luhansk, CEO Pavel Cesnek told the Interfax news agency on June 4. At the same time, the company has recommended employees who live in the suburbs to take a paid vacation for the turmoil period. Cesnek also denied rumors that Luhanskteplovoz is going to reallocate its production to a related facility in Bryansk, Russia. The company earlier reported it increased its output 50% yoy (in value terms) in 4M14, assembling 92 locomotive units. In 2014, the company is going to produce 312 diesel locomotives for Russian Railways (+20% yoy) and up to 56 electric locomotives for Ukrainian Railways (+14x yoy), provided that expected orders will arrive from the Ukrainian monopoly.

Ukraine’s leading private energy holding DTEK allowed the employees of its Donetsk-based offices to work remotely, either from their homes or offices in other cities, Interfax reported on June 4, citing the company’s press service. Steel holding Metinvest, also a part of Rinat Akhmetov’s SystemCapital Management (SCM), applied a similar approach to employees’ personal security at its Donetsk headquarters, according to our information.

Meanwhile, many Donetsk businessmen have begun to reallocate their businesses and start paying taxes in the neighboring Dnipropetrovsk region, according to the deputy governor of Dnipropetrovsk, Borys Filatov.

Alexander Paraschiy: Business activity is apparently slowing down in the Donetsk and Luhansk regions. Luhanskteplovoz is controlled by a Russian holding and therefore not among the targets of pro-Russian terrorists. Nevertheless, it’s clear that the warfare has affected this company as well, as many workers have preferred to stay home for security reasons. The Donetsk and Luhansk regions together contributed 16% to Ukraine’s GDP and 23% to its industrial output in 2012. It’s clear that if the warring doesn’t stop in the next few months, it will severely harm Ukraine’s GDP and state budget collections, as well as extend state expenditures.