LSE-listed MHP, Ukraine’s largest poultry producer, reported 2023 sales of $3,021m (+14% y-o-y), EBITDA of $508m (+15%; incl. IFRS 16 effect) and net income of $142m (vs. net loss of $231m in 2022). Full-year EBITDA before IFRS 16 stood at $445m, up 16% y‑o-y. Export sales came in at $1,807m or 60% of total revenue (vs. 61% in 2022). The reported full-year results imply 4Q23 sales of $727m (-5% y-o-y), EBITDA of $141m (+2%; incl. IFRS 16) and net income of $20m (-47%), for an EBITDA margin of 19% (+1pp y-o-y). End-2023 net debt (before IFRS 16) stood at $1,101m, for a Net Debt to EBITDA ratio of 2.47x (vs. 3.22x at end-2022). End-2023 cash totaled $436m, down from $446m at end-9M23 but up from $300m as of end-2022.

Vodafone Ukraine (VFU), Ukraine’s second largest mobile operator, held a conference call to discuss its 2023 results published on Apr. 30. The company confirmed its intention to continue servicing its debt as scheduled, including repaying a $400m Eurobond maturing on Feb. 11, 2025, provided that national F/X regulations make it possible. VFU reported its current liquidity balance at $283m, up from $228m as of end-2023 and 85% of the total held in hard currency in Ukraine. The company expects to accumulate $400m of cash by end-January 2025, in time for the bond maturity, by relying on its solid cash generation and rescheduling payments to certain vendors under long-term supply contracts. At the same time, if the existing restrictions on external debt repayments from accounts in Ukraine remain in place by early 2025 and/or the company fails to secure an individual permit from the NBU for such payments, it will explore options to refinance the bond with IFI loans or attract support from its parent. The latter possibility hinges on an expected NBU decision to allow companies to repatriate “new” dividends, in which case VFU would be able to pay out its 2023 NI ($139m) to the parent and subsequently use it to repurchase/redeem the bond.

The Ministry of Finance placed UAH 7.0bn ($176m) of hryvnia-denominated bonds at a primary auction yesterday.

Base-load electricity prices on the day-ahead (DAHD) market averaged UAH 3,116/MWh in April, up 7.1% m-o-m and 15% y-o-y. On a related note, the sector regulator, the National Energy and Utilities Regulatory Commission (NEURC), proposed to relax nightly price caps by increasing them to UAH 4,000/MWh from current UAH 3,000/MWh at the end of May.

Vodafone Ukraine (VFU), Ukraine’s second largest mobile operator, reported 2023 revenue of $591m (-3.5% y-o-y), EBITDA of $347m (-0.4%), and net income of $139m (+4.1x), for EBITDA and net margins of 58.7% (+1.8pp y-o-y) and 23.5% (+17.9pp). Full-year CAPEX jumped by 40% y-o-y to $155m. VFU booked a 2023 ARPU of UAH 107.2 ($2.8), up 18% y-o-y in UAH and up 4.7% y-o-y in USD terms. Its customer base rose by 3.2% y-o-y to 15.9 million subscribers.

The NBU press service said that the recently announced finalization of Stage I of the central bank’s F/X controls liberalization road map may cost $5.5bn in spent NBU reserves. The NBU specified that the upcoming liberalization measures include permitting partial repatriation of “new” dividends, lifting bans on service imports, leases and rents, and allowing to service “old” external debts. The Bank also confirmed that the announced relaxation steps had been incorporated into its latest macro forecast that sees foreign reserves at $43-44bn in both 2024 and 2025, adding that liberalization was needed to provide “more oxygen to businesses and the economy.”

Ukraine’s direct and guaranteed public rose by 5.1% or $7.4bn m-o-m in March, to $151bn, up 3.9% YTD.

Naftogaz CEO Oleksiy Chernyshov said the company boosted gas production by 12% y-o-y in 1Q24, to a two-year high. He also said Naftogaz successfully repaired above-ground equipment at its underground gas storage facilities after it was damaged by several Russian attacks in recent weeks, with the underground gas reservoirs as such being immune to aerial strikes.

Metinvest announced a cash tender offer to acquire up to $70m worth of its outstanding EUR 234m 2025 and $494m 2026 Eurobonds under unmodified Dutch auction rules. The minimum and maximum purchase prices for the 2025 bond were set at 85% and 92% of the principal. For the 2026s, the maximum tender price will be set according to the auction procedure.

DTEK Energy reported 2023 revenue of $1.8bn (-16% y-o-y), EBITDA of $695m (-10%) and net income of $374m (vs. $457m net loss in 2022), booking EBITDA and net margins of 38% (+2.5pp y-o-y) and 20% (+29pp). Net operating cash flow surged by 182% y-o-y to $872m, net investing cash outflow jumped by 181% to $440m, and net cash outflow from financing activities stood at $443m (+86% y-o-y). Total debt fell by 19% y-o-y to $1.1bn and net debt dropped by 10% y-o-y to $1.0bn, yielding a Debt/EBITDA of 1.5x (vs. 1.6x in 2022) and Net Debt/EBITDA of 1.5x (vs. 1.7x in 2022). End-2023 cash fell by 21% y-o-y to $44m, with the equivalent of $3.7m held in foreign currencies.

The Ukrainian Economy Ministry estimated real GDP growth at 4.6% y-o-y in March and 4.5% y-o-y in 1Q24 (both +/-1pp), up from 3.6% y-o-y in 2M24 and +3.5% in January.

Russia intensifies offensives in Donbas, rushing to exploit recent gains before Ukrainian firing capacity recovers thanks to newly approved US supplies

According to NBU Governor Andriy Pyshnyi, the Bank sees grounds for completing the first stage of its F/X Liberalization Strategy, including permission to repatriate so called “new” dividends, execute service import transactions, and make payments on “old” debts. The planned liberalization measures are intended to stimulate inflow of private investments. Pyshnyi added that the NBU was in the final stage of calibrating these decisions and would announce them in the coming weeks, with the central bank’s revised macro forecast already incorporating their estimated impact.

The NBU Board lowered the central bank’s key rate by 100bp to 13.5%, following cuts of 50bp in March and a combined 1,000bp in 2023. Additionally, the Bank further modified its operational design by narrowing the interest rate corridor by 100bp as it cut the rate on refinancing loans by 200bp to 17.5% and those on overnight and 3-month CDs by 100bp to 13.5% and 16.5%. The NBU justified further monetary policy loosening by lower-than-expected inflationary pressure and lower risk of irregular foreign aid following the US’s approval of a $61bn aid package for Ukraine. With the new US aid, Ukraine would secure $38bn of direct budget financing in 2024, according to NBU estimates. The Bank stressed that these positives, together with a sufficient level of foreign reserves and F/X market stability, would enable it to proceed with liberalization of F/X controls in the coming weeks (see additional analysis below).

The Ukrainian Antimonopoly Committee (AMCU) issued permission to MHP’s Slovenian-based poultry producer Perutnina Ptuj to acquire, via a JV with Balkan investment group Balfin, a controlling stake in Albanian poultry producers Driza, Fresh Chicken Albania, Industria Foragjere and other assets.

Ukraine has received EUR 1.5bn ($1.6bn) from the EU, the second and final tranche of a EUR 6bn bridge financing loan that forms part of the EU’s EUR 50bn 4-year Ukraine Facility. The disbursement was approved after the European Commission positively assessed Ukraine’s progress on the underlying conditionality.