Greek companies in Ukraine: plant closures and concerns about raw material supplies

Greek companies are quietly following the developments in Ukraine after the Russian invasion, informs Greek edition of OT – “Economic Postman”.

Mills and steel mills are initially working on alternative plans to supply raw materials outside the countries involved in the conflict. Whereas companies that have manufacturing facilities or commercial offices to promote their products put the safety of their employees first.

Of course, exporters who have trade relations with the two countries, as well as representatives of the tourism industry, are also concerned. Today in Ukraine, according to the Department of Economic and Commercial Affairs in Kiev, there are about 45 Greek companies, concentrated mainly in Odessa, Kiev, Kharkov and Lvov. These companies operate in the food, fruit and vegetable trade, recruitment for Greek shipping, consulting services, tourism and catering.

Coca Cola HBC and Sarantis close factories

Soft drink company Coca-Cola HBC has closed its plant in Kiev, Ukraine and asked employees in the country to stay at home following the Russian invasion, a spokesman told Reuters. “We will look into this matter in the coming days,” a company spokesperson said in a written statement.

The Coca Cola plant in Kiev, with 11 production lines, began operation 20 years ago and employs more than 1,300 people. It produces carbonated soft drinks, prepared teas, juices, water and energy drinks, and source most of its raw materials from the domestic market.

The Greek company Sarantis has announced the temporary closure of its subsidiary Ergopak LLC, located in Kanev (Ukraine).

The listed company also has a subsidiary in Russia. In particular, this is Khoztorg LLC, which was attached to the Sarantis group as a subsidiary of Ergopak, upon the acquisition of the latter in 2018. Khoztorg LLC produces goods for the home.

In 2021, Ergopak LLC sales accounted for 6.7% of the group’s total sales, and Khoztorg LLC sales in 2021 accounted for 0.5%. It is noted that almost 50% of Ergopack’s sales are exported to neighboring countries, and its calculations are made in US dollars.

Suspension of work of the ELTON branch in Kharkov

“We are all closely following the shocking events unfolding in Ukraine, we are in constant contact with colleagues from our subsidiary Elton Corporation LLC in Kiev,” the Elton group said in a statement. The company has suspended the operation of its subsidiary until security is restored and the rhythm of daily life returns to normal.

As indicated, the participation of the Ukrainian subsidiary in the financial performance of the group does not fall into the levels of significance and therefore does not have a significant impact on them, both in terms of financial position (1.60% of the group), turnover (2% of the group) and results (0. 87% of the group). Furthermore, the lack of significant exposure of the subsidiary in the local market is emphasized, while the group, as part of regular practice, takes the necessary measures to secure and protect its financial position.”

What Piraeus Bank and ELPE say

There is no direct influence of the group on the supply of products from Russia. Oil (Russian, editor’s note) is bought through traders. Any implications and uncertainties will be assessed before sanctions are imposed. EU, the CEO of EL.PE said during a conference call with analysts yesterday. Andreas Siamisis.

In response to a question from the Hellenic Capital Market Commission regarding recent developments in Ukraine, Piraeus Financial Holdings informs investors that the group’s activities in Ukraine concern the financial institution JSC Piraeus Bank ICB JSC, as well as investments in real estate, corresponding to approximately 0.2 % of the total consolidated assets of Piraeus Financial Holdings as of December 31, 2021.

It is a small credit institution with 15 branches, with assets of only 100 million euros, which corresponds to 0.12% of the corresponding group size (80 billion euros). The bank’s capital is only 20 million euros out of the 5 billion euros of the system group. The credit institution employs 300 people, of which only 3 are Greeks.

Impact on the flour industry

17% of the value of all grain milled by the Milli Loulis Group comes from Ukraine and Russia, although the latter has a larger market share for the Greek-registered company.

According to the answer to the related question of the Greek Capital Market Commission, Mills Louli imports raw materials from several countries and thus has alternatives in case supply from the countries involved is not possible. It is noted that at present it is impossible to assess the impact on trade.

A significant percentage of the value of Kepenos Mills grain markets is in Russia and Ukraine. In particular, for 2021 it amounted to 33% of the total cost of grain purchases. “The company is monitoring ongoing developments related to tensions in Ukraine and Russia in order to be able to assess the impact on market prices, as well as on the flow of supplies,” the statement says.

Κυλινδρόμυλοι Σαραντόπουλος (Cylindrical Mills of Saranthopoulos) during 2021 and 2020 purchased wheat (which is a raw material for the flour milling industry) from Russia and Ukraine through third-party suppliers. These markets in 2021 account for approximately 32% of the value of all wheat markets in the group, and in 2020 – 29.5%, respectively. Russia and Ukraine are known to be the breadbasket of Europe, the listing company notes.

The war between the two countries, according to the administration, based on the opinions of international analysts, will disrupt the supply of European (and not only) countries with wheat of this origin, which, in turn, will affect the cost of flour production. At this stage, it is impossible to assess the impact of the Russian-Ukrainian conflict on the turnover, results and financial position of the company and the group.

Recalling that during her long career (founded in 1912 in Piraeus, as a sole proprietorship of Konstantinos I. Saranthopoulos) she has faced many different difficult situations that she has managed to overcome and successfully adapt, the listed company notes that it focuses on other markets. “In order to ensure the uninterrupted supply of its production process and to contain as much as possible the inevitable rise in the cost of the final product.”

Deliveries of steel and rolled steel

Ukraine and Russia are important sources of steel and rolled steel production, both for the global market and for the Greek steel industry, according to LIBAR TZIRAKIAN PROFIL.

The company has been supplying raw materials from the above steel markets for a number of years, covering part of its needs. In 2021, Jirakian covered only 17% of its steel needs in the above markets, while the share of its unallocated reserves is 3% of its assets.

During the current year, the company, tracking the escalation of intensity, throughout the previous period, took protective measures, increasing the dispersion of its supplies of raw materials from other countries.

The share of turnover associated with the sale of imported products from Ukraine and Russia amounted to about 6.5% of the total volume, according to Sidma SA Steel Products (ΣΙΔΜΑ ΜΕΤΑΛΛΟΥΡΓΙΚΗ ΑΕ), and the share of purchases of products from the above countries amounted to about 6.8% of the total company’s import volume.

The company notes that it has a large spread of suppliers from different countries to ensure that the supply chain continues smoothly. However, many steel producers are heavily dependent on raw material supplies from parts of Ukraine and Russia. At present, it is impossible to calculate the impact of recent events in Ukraine and Russia on the activities of our suppliers and, accordingly, on the activities of the company, emphasizes Sidma.

“As for the administration’s assessment of the indirect consequences of recent events in Ukraine and Russia, with a possible scenario of a protracted conflict, the cost of energy in the eurozone and, consequently, in our country will increase, which will lead to higher inflation. Although the European Central Bank did not plan to immediately raise interest rates to fight inflation, the most likely scenario would be to follow sooner than the central banks of England and the United States.

An indirect effect of the increase in interest rates will be an increase in the company’s financial costs, with a corresponding negative effect on its results.

Suspension wave of international giants

It should be noted that, in addition to Greek companies and industries with an international presence, such as Carlsberg, whose share in the Ukrainian beer market is 31%, production has been stopped at 3 more production facilities in Kiev and Zaporozhye. Carlsberg also has a third brewery in Ukraine, in Lvov.

Nestlé, the world’s largest food manufacturer with 3 factories and 5,000 employees in Ukraine, has also stopped production and distribution of its products in Ukraine. A spokesman for the Swiss giant said Nestlé had “temporarily closed factories, warehouses and supply chains” in the country.

Mondelez, which acquired Greek company Chipita a few months ago, said it had suspended operations at its two Ukrainian factories in Trostianets and Vyshgorod, which produce a range of products, including local brands such as Jubilee cookies and Korona chocolate. Chipita maintains a commercial presence in Ukraine with offices in Kiev.

Turkish brewery Anadolu Efes, which operates a 3,000-employee joint venture with Anheuser-Busch InBev in Ukraine, has also stopped sales and production, the report said.

Tweeting that it was “deeply concerned” by the situation in Ukraine, steelmaker ArcelorMittal said it had plans in place to ensure its employees “stay safe”. As for its plant, the company is “working to slow down production to a technical minimum, and production in our mines will be stopped.”

As recently announced, Japan Tobacco Inc. closed its factory in Kremenchug in central Ukraine, which employs 900 people.

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