Page 41 - UKRRptFeb24

The World Bank has summarized Ukrainian business losses for the almost two years of war. According to the WB, 20% of Ukrainian companies face direct destruction, while 70% have lost income. It is noted that the average income decreased by 50% compared to 2021. The eastern regions were the most affected; their revenue fell by almost 70%. The south of the country was affected to a lesser extent, where an average drop of 60% is recorded, while in the western regions, this indicator is approximately 40%. Regarding income, the east of Ukraine experienced the greatest destruction, where approximately 47% of enterprises were damaged, to a lesser extent in the southern regions, where the figure is 29%. Metallurgy was most affected by the war, which lost more than 60% of its capitalization. The WB also pointed out a few other problems Ukrainian businesses suffered from. In addition to the actual consequences of the war, there were problems with energy supply, logistics, a drop in demand, a lack of workers, and finances. The bank predicts a slight recovery for the Ukrainian economy after a more than 30% decline in 2022.
What trends were observed in 2023’s business environment? According to Gradus Research, most traditional Ukrainian businesses and startups declare that they do not need to relocate from the country. At the same time, the migration of Ukrainians abroad is tangible and is reflected in the operations of Ukrainian companies. Despite the challenges associated with the shortage of personnel, the search for new employees, and the preservation of current sales markets and customers, the study shows a proactive business position and a readiness to solve these issues. Also, businesses plan to build active and moderate development strategies in the short term. Companies continue to look optimistically at growth prospects and primarily include active or moderate development plans in their strategy. Another trend is that the share of businesses that have undergone partial or complete industry transformation has increased significantly. In general, businesses have adapted to the war's challenges, and most companies are now operating in pre-war mode.
Despite the war, the M&A market in 2023 reached $1.4B and significantly exceeded the previous year's figure. The volume of M&A deals in Ukraine at the end of 2023 amounted to $1.2B, reported InVenture. Considering these deals' low publicity and transparency, this figure could be slightly higher and amount to about $1.4B. Compared to 2022, the total volume of M&A deals increased last year by 250% but was still about 50% less than 2021’s pre-war figure of $2.7B. The number of M&A deals also increased in 2023, up to 87 transactions against 54 in 2022 (120 deals in 2021). The largest number of deals last year took place in the IT, commercial real estate, industrial logistics real estate, and agricultural sectors. Many investors announced preparations for implementing greenfield projects in Ukraine without waiting for the war to end. Most of the newly initiated projects are connected with companies with foreign capital.
41 UKRAINE Country Report February 2024 www.intellinews.com