WSE-listed Ukrainian agricultural producer IMC has announced distribution of an interim dividend of EUR 0.45 ($0.50) per share, which was approved by a resolution of the Board of Directors. The interim dividend will be payable on Aug. 29, 2019 to shareholders who are on the register at the close of business on Aug. 22, 2019. The dividend payment, made in the euro, will be subject to a deduction of Luxembourg withholding tax at a rate of 15%.

Motor Sich (MSICH), the leading producer of aircraft and helicopter engines in the CIS, will shift to a four-day workweek starting from September 1, due to difficulties with signing new contracts and the lack of some components.

The Managing Director of Naftogaz Yury Vitrenko said in an interview that the company was not considering carving out oil production segment from the company and selling it to settle the company’s tax debts, which would have left Naftogaz with the gas production segment and let minority shareholders acquire oil production.

Ukraine’s provisional real GDP accelerated to 4.6% y-o-y in 2Q19 from 2.5% in 1Q19 and 3.8% in 2Q18, as seasonally adjusted GDP inched up 1.6% q-o-q, accelerating from 0.3% in 1Q19. The breakdown of 2Q19 real GDP and its nominal value are due to be published on Sep. 18.

The government approved an additional Public Service Obligation (PSO) for Naftogaz Ukrainy, ordering it to sell gas to DTEK’s Luhansk power plant at a reduced price of UAH 2,895/tcm, or 40% below the current PSO price for households and heating utilities.

The Ministry of Finance sold UAH 1.9bn of hryvnia-denominated bonds at an auction yesterday, down from UAH 2.7bn sold last week and 37% below the placement cap of UAH 3.0bn. MinFin placed UAH 1.4bn of 2-year bonds at 16.43% p.a. (unchanged from previous sale on Jul. 30), UAH 0.5bn of 12-month debt at 16.16% p.a. (-6bp w-o-w), and UAH 0.1bn of 6-month paper at 16.47% p.a. (+6bp from previous placement on Jul. 30).

According to Ukrainian Railway (RAILUA) CEO Yevhen Kravtsov, the company is negotiating with the US Exim Bank to finance a second deal with General Electric for the supply of up to 40 diesel locomotives. He projected deliveries would start by the end of this year or in early 2020. The company is also discussing supplies of electric locomotives.

Kryukiv Rail Car (KVBZ), the largest manufacturer of freight cars and sole producer of passenger railcars in Ukraine, reported stronger 1H19 operating and financial results. Over the period, the company sold 658 open cars (vs. 1,755 in 2018), 540 grain hoppers (vs. 1,723 in 2018) and 200 mineral hoppers (vs. zero in 2018). As a result, sales jumped by 76% y-o-y to $150m, EBITDA soared 265% to $27.0m and net income swelled by 203% to $21.1m, yielding an EBITDA margin of 18.0% (+9.3pp y-o-y) and a net margin of 14.1% (+5.9pp). The company was net cash positive at $39m (vs. net cash of $20m at end-2018).

Ukrnafta increased oil and gas condensate production by 5.4% y-o-y to 6.5 MMbbl and boosted natural gas extraction by 10% to 674 million cubic meters in 7M19. In July, oil production was stable at 0.9 MMbbl (+0.5% y-o-y, -1.5% m-o-m) while gas production rose 7.5% y-o-y to 97 million cubic meters (-0.9% m-o-m).

Customer deposits at Ukrainian banks rose in July, with UAH deposits up 0.1% m-o-m (+8.5% y-o-y) and F/X deposits surging 11% m-o-m (+15% y-o-y). Outstanding hryvnia loans increased 0.8% m-o-m (+3.0% y-o-y) while F/X loans dropped 0.6% m-o-m and 6.1% y-o-y.

We keep watching foreign inflows into domestic UAH bonds. Foreign activity slowed sharply last week, with foreign investors increasing their holdings of UAH-denominated government bonds by a mere $7m w-o-w, down from $532m a week earlier.

Many foreign-listed Ukrainian stocks were down w-o-w, but the trend was not as uniform as the week before. The KP-Dragon index lost 1.3% w-o-w, driven by sharp drops in Ferrexpo (-8.3%), Astarta (-3.7%) and MHP (-3.5%), while at the same time some shares were supported: +8.2% in IMC, +0.5% in Ovostar and Milkiland and +0.4% in Kernel.

Consumer prices declined by 0.6% m-o-m in July following a 0.5% drop in June, still causing y-o-y inflation to accelerate to 9.1% from 9.0% in June. Core inflation, an indicator adjusted for regulated utility tariffs and prices of raw foods and energy, inched down 0.1% m-o-m in July (following a flat reading in June) and stood at 7.4% y-o-y, in line with June.

Representatives of political parties elected to the new Verkhovna Rada decided to hold the legislature’s first session on Thursday, Aug. 29.

Ukraine’s early grain harvest stood at 36.8 Mt as of Aug. 9, up from 31.5 Mt a year ago. The harvested area was reported at 9.5 Mha, up 4% y-o-y and representing 95% of the total area under early grain crops, while the average yield came in at 3.86 t/ha or up 12% y-o-y. Wheat production totaled 27.1 Mt, harvested from 6.5 Mha or 96% of total plantings, for an average yield of 4.14 t/ha (+10% y-o-y), while the barley crop stood at 8.5 Mt, harvested from 2.5 Mha or 96% of the total area, for an average yield of 3.41 t/ha (+15% y-o-y). In addition, farmers harvested winter rapeseed from 1.2 Mha or 99% of the total area, gathering 3.1 Mt at an average yield of 2.46 t/ha (-6% y-o-y).

President Volodymyr Zelensky, speaking at a Ukrainian-Turkish business forum in Istanbul, announced plans to carry out farmland reform by end-2019 in order to open up a market for 40 Mha of agricultural land in 2020.