UKRproduct Group's shares dip amid 'uncertainty' over continuing operations

UKRproduct Group's shares dropped on Thursday after it cautioned of "significant uncertainty" over its ability to continue operations as it struggles to achieve profitability even as it remained in breach of certain terms on a loan covenant.

The Ukrainian dairy and beverage producer said it continued to be in breach of the covenant terms on its loan from the European Bank for Reconstruction & Development, but remained optimistic that the multilateral lender would not demand accelerated repayment.

Critically, with cash and cash equivalents at £0.2m at the end of 2018, down from £0.5m at the same point a year earlier, UKRproduct also said it aimed to raise further funding in the second half of 2019.

Its main strategic aim was to expand foreign sales and extend its reach into Asia and Africa, in particular, while continuing to grow in Kazhakstan and Ukraine.

The AIM traded company swung from a loss before tax of £1.2m for 2017 to a profit before tax of £0.1m in 2018 as revenue rose by 21% to £36.9m amid higher sales of packaged butter, processed cheese products and beverages.

But the benefits of the revenue increase were largely tempered by a 24% jump in cost of sales to £33.8m.

Looking ahead, the business said it expects to lift its sales volume and revenues by launching new products and improving the profitability of its key dairy product and beverage segments.

Ukrproduct Group's shares were down 10.49% at 2.90p at 1248 BST.