A year ago Ukrainian oligarch Petro Poroshenko could barely compete to win the Kyiv Mayor elections, now he is the President of Ukraine. He won in the first round over Yulia Timoshenko herself. Who is the person that became President of Ukraine? Pavel Sheremet sketched a human and political portrait of the new Ukrainian President.
And how realistic they are
The Central Electoral Committee has counted 100% of the protocols at the early presidential elections. The end result – 9 857 308 people, or 54.7% of all those who have participated in the elections, voted for member of the Parliament Petro Poroshenko. The inauguration – in the case of early elections the law only gives the newly-elected president five days to take the oath, – it appointed for June 7th.
On the eve of the elections Petro Poroshenko took up a number of obligations – taking into account the special status of the early elections, the high level of support of the candidate and the unstable situation in the country, their realisation will be observed especially closely.
Forbes remembered Petro Poroshenko’s main promises and asked experts to analyse how difficult it will be for the new President to keep his word.
Poroshenko did not choose the best time to win the elections – Roshen will not give him more than a billion dollars. However, there are options.
1,5 months ago we wrote the following articles. During this time, it has not lost its relevance. How much will Poroshenko be able to get for his main business – Roshen company?
In an interview to the German newspaper Bild, Petro Poroshenko stated that in case of victory at the elections, he would sell Roshen corporation. Taking into account that within two months of the elections, 24.9% of the voters are ready to vote for him, and only 8.2% would give their votes to Yulia Timoshenko, the chances that Roshes would be sold are quite high. UPD on May 26th, 2014: After the announcement of the results of the exit polls, according to which Poroshenko is winning in the first round, the future President stated that he had already given orders to find a buyer for his main asset – the confectionery company Roshen.
The biggest confectionary company of Ukraine, Roshen corporation, is well-known outside of the country. And not because of the factories across the border, or because of the fact that the company’s produce is being supplied to markets in 35 countries. Roshen has stably been listed among the biggest confectionary companies in the world. According to the British specialised magazine Candy Industry, Roshen is the 20th biggest corporation in the world in terms of revenue, having gained about $1bn in 2013. A year ago they did better: Roshen’s revenue was $1,3bn, it took 18th place.
The main reason for the fall of revenue is the loss of the Russian market because of the trade wars. In one of his interviews, the general director of the company Vyacheslav Moskalevskiy evaluated the supplies to the northern neighbour at $200mn.
The annex of Crimea and the Kremlin’s rhetoric allow us to suppose the Poroshenko has lost not only the Russian market, but also the confectionary plant in this country, for a long time. In March of 2014 the Russian police arrested the accounts of the Lipetsk confectionary. The formal reason was that Roshen is suspected of producing counterfeit product, the informal one is pressure on one of the Euromaidan leaders and favourite of the presidential race. Production in Lipetsk has been stopped.
Last year Roshen was able to partially compensate for the Russian losses at the internal market. Poroshenko got lucky with the consumer boycott of Party of Regions businesses. Roshen’s main competitors – Konti and AVK – belong to “regionals.” This year there will be no such compensation.
How much could Roshen be worth? The corporation is not publicly, it has no consolidated financial accountability, its debts are unknown, the fate of the Russian assets is questionable, and a political and economical crisis is underway in Ukraine. But even with such details, it is possible to approximately evaluate the cost of Roshen.
The simplest and least sensitive to the above mentioned difficulties way to evaluate the company is to compare it to similar public corporations. Thus, the average coefficient “stocks price/revenue” for confectioners from Turkey and Poland constitutes between 1,3 and 1,9 now. This means that if the risks of doing business in Ukraine were the same as in Poland or Turkey, then it is most likely that Roshen would cost between $1,3 and $1,9bn (revenue multiplied by the coefficient). Last year Boris Kolesnikov put up his confectionary company Konti for sale for $1bn, which accorded to a coefficient of 2,4, however there were no buyers.
Today Ukraine is far from being Poland or Turkey. “Now the country risks are very high. The investment climate was being destroyed for four years, the economy is in recession, the relations with Russia are, to put it mildly, a cause for caution,” says CEO of the investment company Concorde Capital Igor Mazepa. “Therefore if the deal started now, the potential buyers would begin with a discount of 20-30%.” Another Ukrainian investment banker evaluated the discount at a minimum of 50%. “While Ukraine has a presence in the emergency CNN reports within the context of Russian tanks, it is senseless to sell anything.”
If Poroshenko were to sell Roshen immediately after the elections, it is unlikely that he would get more than a billion dollars, and the discount would constitute between $250 and $900 million. It is most likely he will not have to pay such a high price for his presidency. Time is on Poroshenko’s side. “Let’s wait until the beginning of the deal, see what the situation in the economy and politics is like,” says ICU investment company partner Makar Paseniuk. “It can be supposed that the coefficient for sales at a more stable time would be comparable to the numbers of world leaders – Nestle and Kraft Foods (now the coefficients are 2.33 and 1.82 respectively – editors). “Such big deals last for months, or even a year,” says Mazepa. “An it well may be that next year stocks from Ukraine would be sold with a premium, not a discount.”
Aside from coefficients and market conjuncture there are more important factors. A year ago, in his Forbes interview, Petro Poroshenko said: “The motherland and Roshen are not for sale.” Whether the presidential seat will force him to part with his beloved asset ‘for real,’ or whether Roshen will be given ‘for safekeeping’ to his faithful companions is an open question.
Boris Davydenko, Ivan Zaycev.
Translated by Mariya Shcherbinina
Sergiy Leshchenko, UP
Petro Poroshenko is surely leading in the elections of the President of Ukraine. His story is an example of what kind of dramatic changes politics undergoes in the period of revolution and how rapidly ratings may change in an unstable society.
A year ago Poroshenko did not brave announcing his will to become mayor of Kyiv, being unsure of his own victory. And today he has a threefold advantage over his pursuers at the elections of the President, caused by loss of trust to oppositional party leaders on Maidan and Yanukovich’s flight, as a result of which 30 per cent of the voters have lost the representative of their interests in politics. Continue reading
Petro Poroshenko is planning to sell his Roshen confectionery if he wins the presidential elections. This was stated in an interview with Germany’s Bild newspaper, which was published n Wednesday, says “Ukrinform”. Continue reading
Ukraine has lodged a complaint with the World Trade Organization (WTO) demanding that the Russian Federation immediately lift trade bans on the shipment of confectionery products of the Ukrainian corporation Roshen that were imposed by Russia’s Federal Service for Supervision of Consumer Rights Protection and Human Welfare in late July 2013, reports UNIAN on March 31.
In a statement presented at the meeting of the WTO Committee on Technical Trade Barriers, March 19-20, and published on the organization’s site, Ukraine also requests that Russia provide specific reasons for implementing the discriminatory measures against Roshen.
Russia froze the accounts of the Ukrainian confectionery corporation Roshen on March 14, the corporation’s press secretary Inna Petrenko informed ITAR-TASS.
Petrenko also reported that Roshen has suspended production for a week at its Lipetsk facility in Russia, starting March 19. “Work has been suspended due to the fact that yesterday, March 19, company representatives of the Ministry of Internal Affairs of Russia in Moscow conducted inspections at our Lipetsk company as part of a criminal case that we consider fabricated. Under such conditions, production is impossible,” she explained. Continue reading