Russian regulator finds violations at banned Ukrainian cheese plant

Rospotrebnadzor, Russia’s state service responsible for the protection of consumer rights, found significant deficiencies at Ukraine’s Gadyachsyr cheese plant, the regulator said today. Gadyachsyr is one of three cheese makers whose exports to Russia were banned and the only one so far that has been inspected. Rospotrebnadzor did not reveal its plan to inspect other Ukrainian producers, including Milkiland’s (MLK PW) plant.

Yegor Samusenko: The news is negative for Milkiland, as it indicates a resolution to the cheese war between Russia and Ukraine might still be a long way off. Regardless of the true reasoning behind the conflict, changes in technological processes (which are likely to be required following the inspections) could take several months. We are changing our expectation on the renewal of cheese exports to Russia from April 2012 to 3Q12. According to our estimates, Milkiland is losing around EUR 1.5 mln each month due to the Russian cheese export ban or 3% of our pre-ban 2012 EBITDA estimate of EUR 43.6 mln.