EuroChem reports $25 mln loss on sale of distribution assets in Ukraine
EuroChem, a major Russian fertilizer producer, reported a loss of $25 million on the divestment of distribution assets in Ukraine.
Following the import ban on specific products at the beginning of the year in Ukraine and further sanctions later against a large number of Russian suppliers, the EuroChem decided to divest 100% of its distribution assets in the country (two Ukrainian companies) in May to an unrelated party, the company said.
EuroChem sold 100% of shares in both companies for $53 million by the end of May. The consideration is subject to payment in five years; the discounted value is $29 million. The net assets of the sold subsidiaries exceed this amount and are estimated at almost $55 million.
Ukraine imposed sanctions in the fall of 2017 against a number of EuroChem Group companies, as well as other Russian fertilizer suppliers. The authorities said the sanctions were being imposed because the companies shipped product to the self-proclaimed Donetsk and Luhansk people's republics through checkpoints and customs offices shut down or prohibited by the Ukrainian government. Ukraine later imposed a complete ban on imports of granulated and calcined ammonium nitrate, as well as ammonium sulphate produced in Russia from March 1, 2018 to the end of 2019.
EuroChem said it took all necessary measures to redirect its products from Ukraine to other markets with minimal losses to profitability.
Ukraine's share of EuroChem's sales has not been disclosed. The overall share of CIS countries in the company's sales shrank to 5% ($63 million of $1.31 billion in revenue) in the second quarter of 2018 from 8% ($86 million off $1.06 billion) in the same period a year earlier.