Greek companies in Ukraine: The closure of factories and the anxiety about raw materials

Greek companies are calmly following the developments in Ukraine after the Russian invasion.

Flour and steelmakers are initially working out alternative plans for the supply of raw materials beyond the countries involved in the conflict, while companies that maintain production facilities, or commercial offices to promote their products, put the safety of their employees as a first priority.

Of course, the exporters who have trade relations with the two countries are also concerned, as well as the representatives of the tourism industry.

Today in Ukraine, according to the Office of Economic and Commercial Affairs in Kiev, there are about 45 Greek companies active, concentrated mainly in Odessa, Kiev, Kharkov, and Lviv. These companies are mainly active in the field of food, fruit and vegetable trade, selection of staff for Greek shipping, consulting services, tourism and catering.

Coca Cola HBC and Sarantis close factories

The Coca-Cola HBC soft drink company closed its plant in Kiev, Ukraine, and asked staff in the country to stay home after the Russian invasion, a spokesman told Reuters.

“We will look into the matter in the coming days,” the company spokesman said in a written statement.

The Coca Cola plant in Kiev, with 11 production lines, started operating 20 years ago and employs more than 1,300 people. It produces carbonated soft drinks, ready-made tea, juices, water and energy drinks, while it supplies many of its raw materials from the domestic market.

At the same time, Sarantis announced the temporary closure of its subsidiary Ergopack LLC, located in Kaniv, Ukraine.

The listed company also has a subsidiary in Russia. Specifically, it is Hoztorg LLC, which was annexed to the Sarantis group as an affiliated company with Ergopack when the latter was acquired in 2018. Hoztorg LLC produces household goods.

In 2021, Ergopack LLC sales accounted for 6.7% of the group’s total sales, while Hoztorg LLC sales in 2021 accounted for 0.5%.

It is noted that almost 50% of Ergopack’s sales come from exports to neighboring countries and which are based on USD.

Suspension of the operation of the ELTON subsidiary in Kharkov

“We are all closely following the shocking events unfolding in Ukraine, being in constant contact with our colleagues at our Kiev-based subsidiary Elton Corporation LLC,” the ELTON Group said in a statement.

The company proceeded to suspend the operation of its subsidiary until security was restored and the rhythms of daily life returned to normal.

As it is pointed out, the participation of the Ukrainian subsidiary in the financial figures of the group does not fall into the levels of importance and therefore does not have a significant effect on them, both in terms of financial position (1.60% of the Group), turnover (2 % of the Group) and the results (0.87% of the Group). In addition, it is emphasized that there is no serious exposure of the subsidiary in the local market while the Group as a regular practice takes the necessary measures to ensure and protect its financial position.”

What Piraeus Bank and HELPE report

There is no direct exposure of the group regarding the supply of products from Russia. The crude is bought through traders. Any implications and uncertainties will be assessed, prior to EU sanctions. said the managing director of ELPE, Andreas Shiamishis in yesterday’s teleconference with the analysts .

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

It is a small credit institution with 15 branches, whose assets amount to just 100 million euros, an amount that corresponds to 0.12% of the respective sizes of the group (80 billion euros). The bank’s capital amounts to just 20 million euros out of a total of 5 billion euros of the systemic group. The credit institution employed 300 people, of which only 3 are Greeks.

A blow to the flour industry

17% of the value of the total grain milled by the Milli Loulis group comes from Ukraine and Russia, although the latter has a greater specific weight in the markets of the Greek listed company.

According to the answer to a relevant question of the Hellenic Capital Market Commission, Mills Loulis imports raw materials from several countries and thus has alternatives in case the supply from the countries involved is not possible.

It is not possible to estimate the possible impact on turnover at this time, it is pointed out.

A significant percentage of the value of the grain markets of Kepenos Mills comes from Russia and Ukraine. Specifically, for the year 2021 it amounted to 33% of the total value of grain purchases. “The company is following the ongoing developments regarding the tension in Ukraine and Russia, in order to be able to assess the impact on market prices, as well as on the flow of supplies,” it said.

Sarantopoulos Mills also has a large exposure, which during the year 2021 and during the year 2020, made purchases of wheat (which is the raw material for the flour industry) originating in Russia and Ukraine, through third party suppliers. These markets, for the year 2021 represent approximately 32% of the value of the total wheat markets of the Group, while for the year 2020 29.5% respectively. Russia and Ukraine are, as is well known, the granaries of Europe, as was mentioned by the listed company.

The war between the two countries, according to management, 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 production costs for flour. At this stage it is not possible to assess the impact of the Russo-Ukrainian conflict on turnover, results and the financial position of the company and the group.

Recalling that during its long operation (founded in 1912 in Piraeus as a sole proprietorship of Konstantinos I. Sarantopoulos) it has been faced with many different troubling situations, which it has managed to overcome and successfully adapt to, the listed company points out that it is oriented to other markets. “With a view to the uninterrupted supply of its production process and the restraint as much as possible of the inevitable rise in the cost of the final product”.

Steel raw materials

Ukraine and Russia are important sources of production of steel raw materials, both for the world market and for the domestic steel industry, according to Pipe Works L. Tzirakian Profil S.A..

The company has been getting raw materials from the above steel markets for a number of years, covering part of its needs. In the year 2021, Jirakian covered only 17% of its steel needs from the above markets, while the proportion of its retained reserves amounts to 3% of its assets.

During the current year, the company, monitoring the escalation of the tension, throughout the previous period, took protective measures by strengthening the dispersion of its supplies in raw materials from other countries.

The share of turnover related to sales of imported products from Ukraine and Russia was about 6.5% of the total, while the percentage of product purchases from the above countries was about 6.8% of the total of the company’s imports.

The company notes that it has a large dispersion of suppliers from different countries in order to ensure the smooth continuation of its supply chain. Many steelmakers, however, depend to a considerable degree on raw material supplies from parts of Ukraine and Russia. At this time it is impossible to calculate the impact of recent developments in Ukraine and Russia on the activities of our suppliers and consequently on the respective activities of the company, the firm emphasizes.

“As for management’s assessment of the indirect effects of recent developments in Ukraine and Russia, in a possible scenario of prolonged conflict, energy costs in the eurozone and consequently in our country will increase, pushing inflation higher. Although the European Central Bank did not immediately plan to raise interest rates to fight inflation, the most likely scenario would be to follow sooner than expected the central banks of England and the United States.

“An indirect effect of the increase in interest rates will be the increase in the financial costs of the company with a corresponding negative effect on its results”, it is stated.

Wave of suspensions of operation by international giants

It should be noted that in addition to Greek companies and industries with an international footprint, such as Carlsberg, which has a 31% share in the Ukrainian beer market, stopped production in 3 production units in Kiev and the southern city of Zaporizhzhya. Carlsberg also has a third brewery in Ukraine in the western city of Lviv.

Nestlé, the world’s largest food manufacturer with 3 factories and 5,000 staff in Ukraine, has also stopped producing and distributing 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 Trostyanets and Vyshhorod, 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 manages a joint venture with Anheuser-Busch InBev in Ukraine with 3,000 employees, also stopped sales and production, it said.

Writing on Twitter that it was “deeply concerned” about the situation in Ukraine, steelmaker ArcelorMittal said it had made plans for its employees to “stay safe”. As for its factory, the company “is working to slow down production to the technical minimum and production will stop in our underground mines.”

Japan Tobacco Inc. has closed its factory in Kremenchuk in central Ukraine, which employs 900 people, as recently announced.