28 October 2021, Thursday, 23:55
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Foreign Companies Suffer Losses in the Belarusian Market

Foreign Companies Suffer Losses in the Belarusian Market

For some, revenue is sagging, for others - profit.

Most foreign companies operating in the Belarusian consumer market attributed the deteriorating financial performance to the political and economic crisis in the country in their semi-annual reports.

Some of them have lower revenues, while others have lower operating and net profits.

Zavtra Tvojej Strany studied the reports of some large public players with foreign capital, which occupy significant positions in the consumer market of Belarus.

Olvi Group: there is more beer but less operating profit

The Finnish Olvi Group, which owns Lidskoe Pivo, is one of the few representatives of foreign public business with more or less positive results in the first half of the year.

According to the group's report, its sales in monetary terms on the Belarusian market increased by 6.2% and amounted to 43.8 million euros. The growth in Belarus was higher than the average for the whole Olvi business and yielded only to Finland. The number of employees of local companies also increased, from 763 during the same period in 2020 to 816 this year.

However, Olvi Group has significantly lost in the Belarusian market in terms of operating profit. It decreased by 6.1% to 6.8 million euros. It should be noted, however, that in Estonia and Latvia, where the group also operates, the decline in operating profit was more significant.

“In Belarus, Olvi Group was able to successfully develop its business, taking into account the political and economic situation in the country. Sales in the first half increased by 14.5 percent. The depreciation of the exchange rate affected the growth in net sales and operating profit, measured in euros, relative to the growth in volume. The local currency in 2021 has depreciated by an average of 19 percent compared to the previous year. Net sales, denominated in euros, increased by 6.2 percent, and operating profit decreased by 6.1 percent,” the report says.

Olainfarm: loss in revenue and drop in share in total sales

The Latvian pharmaceutical company Olainfarm, known to consumers for such medicines as Furamag / Furazol, Neurodimin, Noofen, Adaptol, Etatsizin, and Fenkarol, ended the first half of the year on the Belarusian market with a decrease in revenue by 15%... Its volume amounted to 7.7 million euros, although this amount was 9.1 million euros in the same period last year.

"The decline in demand in Belarus is closely linked to the political and economic crisis, the fall of the Belarusian ruble against the euro, as well as the application of a 10% value-added tax on drugs, starting in February 2021," the report said.

The decline in sales and revenue affected the share of Belarus in the overall financial picture of the company. It decreased by 2 percentage points to 12%, although the Belarusian market is still the third most important after the Latvian and Russian ones.

Kesko: exchange rate losses on credit financing of Belarusian business

Due to the change in the status of Kesko Senukai, the Finnish retailer did not publish the financial indicators of its Belarusian network of construction hypermarkets OMA that it owns.

But the semi-annual report of Kesko speaks of losses on exchange rate differences that the group was forced to incur as a result of lending to a Belarusian enterprise.

“In the comparable period, net finance costs were increased by exchange differences, changes in the fair value of derivatives at interest rates, and losses from the valuation of investments in liquid assets. Of the exchange rate differences for the reporting period, 2.8 million euros were caused by exchange losses on loan financing in euros of the Belarusian subsidiary Kesko Senukai OMA,” the document says.

SFG: falling sales and decreasing share

The situation that has developed in the Belarusian market for the Estonian Silvano Fashion Group has already been reported by Zavtra Tvojej Strany.

The sales of the group, which owns the Belarusian factory Milavitsa and Latvian Lauma, fell there by 5.2% to €5.56 million, while the share of the Belarusian market in total sales of the group dropped by almost 10%.