Trigon Agri A/S (TAGR), a Stockholm-listed company with almost a third of its farmland in Ukraine, said the East European country’s new government will probably help improve business climate.
“Dramatic” events in Ukraine have so far not affected Trigon’s operations, Chairman Joakim Helenius said today as the nation’s interim government accused the Russian military of direct involvement in escalating tensions in the Crimean region. The hryvnia’s 13 percent depreciation this month will benefit the Copenhagen-based grain producer, whose costs are in the local currency and sales in dollars, he said.
Ukraine’s Prime Minister Arseniy Yatsenyuk, approved by parliament yesterday, seeks financial assistance from the International Monetary Fund and closer ties with the European Union. Ousted President Viktor Yanukovych spurned an EU pact in November and instead won a bailout from Russia, triggering the biggest street protests since Ukraine gained independence in 1991, which led to the collapse of his administration last week.
“Ukraine’s move toward a more stable and more transparent form of governance, which these changes would seem to indicate, would only be good for us,” Helenius said on an earnings conference call with analysts and reporters. “It would lower our running, consulting and legal costs quite significantly.”
Trigon farms 50,000 hectares (124,000 acres) in Ukraine, according to its website, out of a total 169,000 hectares in Russia, Ukraine and Estonia. Macquarie Group Ltd. forecast a 16 percent drop in Ukraine’s grain production to 44.5 million tons in the 2014/2015 season, the bank said in a Feb. 25 report.
“An association treaty with the EU would of course be highly beneficial to Ukrainian agriculture and food processing industries,” Helenius said.
Ukraine is the world’s biggest corn exporter after the U.S. and Brazil and number six in wheat, according to U.S. Department of Agriculture data.
“In the longer term, assuming nothing dramatic happening between Russia and the Ukraine, the changes that are taking place should be good for us,” Helenius said. “The legal costs involved in fighting attempts by the tax authorities to impose made-up taxes on business in the Ukraine will drop.”
To contact the reporter on this story: Maria Kolesnikova in London at email@example.com