Daily monitor

Ukraine resumed electricity export to Poland starting April 14, which was stopped in October 2007. According to Ukrinterenergo, state intermediary in electricity export, it has a signed contract with Polish company Zomar S.A. on electricity export until 2015. During April 14 – April 30 2008 Ukraine exported only 8.4% less than in April 2007.

Official statistics indicate real GDP growth accelerated to 6.7% in April and 6.2% in 4M08 from 6.5% YoY in March and 6.0% YoY in 3M08, respectively.

On May 13, Metinvest Holding reported that during 4M08, one of its trading subsidiaries, Metinvest-Ukraine LLC (responsible for Metinvest Group sales in Ukraine and CIS countries excluding Russia), demonstrated strong results. Namely, sales of long products in CIS countries (excluding Russia) increased 45% YoY to 55 thsd mt, whereas long products sales in Ukraine jumped by similar 45% YoY to 380 thsd mt. The leading growth market was Belorussia, which consumed 14 thsd mt, twice as much as in 4M07. Metinvest-Ukraine director general, Oleg Olshanskiy, noted that the company’s growth rate in Ukraine outpaced the average market growth rate by more than two times.

At a May 14 EGM, shareholders of Dnipropetrovsk Metallurgical Plant named after Komintern, or Kominmet, [DMZK UZ, N/R] approved a share capital increase plan. A total of 48.3 mln new shares will be offered at the face value of USD 0.0495 per share, fetching USD 2.4 mln. Shareholders will be able to exercise their exclusive purchase rights (on a pro-rata basis) from July 14-18 (ex-rights day July 14, last trading day July 11); during the second stage, which is to last just one day, July 21, anyone would be able to purchase leftover shares.

Stakhaniv Carriage Works [SVGZ, U/R] has increased its production in Jan. – April, 2008 14% YoY to 2,356 carriage units. In April, SVGZ released 569 freight carriages, about 80% of which were gondola carriages, the most demanded type of carriage in the CIS. From Jan. to April, 2008, SVGZ increased its output of gondola carriages 50% YoY. As of the beginning of May 2008, SVGZ has employed almost 5.8 thsd workers (compared to 4.7 thsd workers in May 2007).

Ukrainian pharmaceutical producers Galychpharm [GFARM UZ, N/R] and Kyiv Medpreparat [KMED UZ, N/R] are planning to implement GMP standards at their manufacturing facilities. Galychpharm is going to implement the GMP standard with its ampule injector unit in June-July this year. The equipment will come in the form of a second unit installed at Galychpharm. The company is planning to move all ampule products to the new units and reject its old way of vacuum sealing. The total output capacity of the 2 units is 20 mln packs annually.

The privatization of oblenergos Poltavaoblenergo [POON], Lvivoblenergo [LVON], Prykarpattyaoblenergo [PREN], Chernigivoblenergo [CHEON], Sumyoblenergo [SOEN] and Odesaoblenergo [ODEN] has officially been halted by State Property Fund (SPF) head Andriy Portnov. The decision to stop proceedings was supported by the cabinet and Prime Minister Yulia Tymoshenko.

FitchRatings changed its credit rating outlook on Ukraine from positive to stable and kept the country’s sovereign rating at BB-. The agency noted the threats of inflation and the widening current account deficit on the country’s macroeconomic performance as reasons for the downgrade. Fitch considers the measures adopted by the Ukrainian government in order to slowdown the price growth insufficient and named inflation as the key factor for the volatility in the Ukrainian economy in the future.

The INNEX stock exchange, which is to hold a second auction on the privatization of the oblenergos by organizing the sale of a 26.98% stake in Lvivoblenergo [LVON], removed an announcement from its website on the cancellation of the auction in question. The 25% stake in LVON will be sold as one lot, with a starting price of USD 110mln or USD 2.09 per share, the average price for the stock during the last six months.

The privatization of a 25% stake in electricity distribution company Poltavaoblenergo [POON] was prohibited by a Ukrainian regional court May 7. The Ukrainian Interbank Currency Exchange (UICE), which was to hold the auction of 25% of POON May 14, had already registered three potential buyers that applied to participate in the auction.