Ukrproduct’s revenue declines 20% yoy in 2009

Ukrproduct Group (AIM: UKR LN), a large Ukrainian producer and distributor of branded dairy products announced its audited consolidated IFRS financial results for 2009 this morning. The group’s revenue declined by 19.6% yoy to GBP 43.2 mln, (up 5.2% yoy in local currency to UAH 528 mln) as its cost of sales shrank 12.7% yoy, which dropped Ukrproduct’s gross profit by 33.6% yoy to GBP 6.93 mln. The company’s EBITDA decreased 36.2% yoy (FY2009 EBITDA margin lost 2.2 pp yoy and comprised 7.4%), while net income slid by 54.3% yoy to GBP 1.04 mln, corresponding to a net margin of just 2.4% (-2.0 pp yoy). Ukrproduct’s total debt comprised GBP 1.58 mln (-57.1% yoy), while its financial leverage remained low: 2009 net debt/EBITDA totaled 0.4x (vs. 0.6x in 2008) as the group’s debt-to-equity ratio halved from 23% in 2008 to 11% last year. The company plans to pay out a final dividend of 0.2h/share on July 16, 2010, making a total 0.4p/share of dividends for the year (dividend yield: 1.3%). Ruslan Patlavskyy: The 19.6% contraction in Ukrproduct’s 2009 sales occurred due to a decrease in demand for cheese and milk products, as consumer disposable income slid 9.2% yoy, which motivated consumers to switch to cheaper dairy products. A 4 pp yoy dip in the company’s gross margin to 16.1% is explained by rapid growth in raw milk prices in 4Q09 as well as a 82.3% yoy rise in gas and 23.3% yoy growth in energy costs.