Milkiland, a dairy group with assets in Ukraine, Russia and Poland, saw EUR 24.81 million of net loss in January-September 2016 and this was 35% down year-over-year.

According to a group's report on the Warsaw Stock Exchange (WSE), revenue fell by 23%, to EUR 112.94 million triggered by devaluation of the hryvnia and Russian ruble.

Gross profit fell by 27%, to EUR 16.7 million due to higher affective raw milk prices. earnings before interest, taxes, depreciation and amortization (EBITDA) decreased by 45%, to EUR 5.3 million.

Operating loss totaled EUR 2.4 million (EUR 7.73 million a year ago).

Milkiland concentrated efforts on offsetting the negative effect of Russian ban by expansion in the Group’s existing markets and acceleration of local cheese production in Russia as well as by finding new export markets.

Raw milk prices growth in Russia and Ukraine is still not fully compensated by increased prices for finished dairy, further price increase in line with the general market trends to be implemented by the group to restore profitability margins.

Ukraine’s dairy products consumption in the nine month of 2016 in comparison with the same period of 2015 decreased 0.5% year-over-year in volume terms. Russian market is forecasted to show slightly weaker dynamics of 2-3% year-over-year decline in dairy products consumption in 2016.

The group expanded its presence on new export markets in Q3 2016, such as Israel, Egypt, Morocco, delivering cheese, butter and SMP to those countries.

Cheese & butter segment contributed approximately 34% to the group’s total revenue. The segment revenue dropped by c.26% to EUR 37.9 million jeopardized by the restrictions imposed by the Russian authorities on dairy imports from a number of countries, including Ukraine and the EU.

The lost export volumes were still not fully compensated by sales growth in the countries of the group’s operation. However, Milkiland managed to deliver solid volume growth in Ukraine, as well as increased local cheese output and sales in Russia.

Whole-milk dairy remained the largest segment in terms of revenue providing for 55%. Its revenues declined by 21% to EUR 62.1 million. In Ingredients and other products segment, revenue decreased by 20% to EUR 12.9 million mainly due to decline in SMP sales by 27% year-over-year.