The EBA Discussion in Dnipro: “COVID-19: A New Reality for Business”
For a month now, the world, the country, and in particular the Dnipropetrovsk region, have been living in new conditions that they have never encountered. COVID-19 has had the strongest impact on the global economy since the 2008 global crisis, and everyone, from the average citizen to the powerful corporation, must adapt to the new reality.
In Dnipro, businesses are now also experiencing new working conditions. Companies have already adapted and have their own strategies and best practices.
Let’s look at the examples of the leading companies in various fields: Centravis Production Ukraine, a leading global supplier of seamless stainless steel pipes, Allo, online store and electronics network, Absolut,Law Firm, BDO Ukraine, International Audit Company, Biosphere Corporation, the largest Ukrainian manufacturer and distributor of home care and personal hygiene products.
Artem Atanasov, senior manager of Centravis Production Ukraine, predicts further serious challenges for the field and a 20% decline in orders. This will be due to the direct impact of the uncertainty associated with the epidemic, as well as the fall in oil prices, which will lead to a reduction in investment in the refining and oil industries.
Now the company works in full-time mode, the download is 90% of the pre-crisis. The company maintains maximum staff structure and for this purpose, for a period it lowers the salary of TOP management by 20-30% and makes a number of decisions to reduce running costs. Employees were provided with additional COVID-19 health insurance, and a high level of protection and sanitary security was introduced at the factory. Financial assistance from Centravis’ trading offices in Switzerland and Germany – about EUR 1 million of interest-free indebted loan under state guarantees – was a significant support.
The retail market is also experiencing difficult times. Thus, Dmytro Derevytsky, Chairman of the Board of Directors of Allo Group, in view of the challenges and trends of today, such as restriction of freedom and movement of citizens, change of social skills, reasonable consumption, careful spending of money, remarked that in order to increase the company’s market prospects, market players need to adapt their products to such consumption and review their strategies.
According to Dmytro, the network of “Allo” increased the cost of operations of the company due to the additional costs of new sanitary standards and transportation of employees to work, reducing the average check. Revenue declined faster than costs. It is planned to reduce 25% of office employees and 25% reduction of salaries of the remaining employees. However, wage reduction will not apply to staff involved in the network. Meanwhile, the company has decided to pay each employee 10,000 UAH in case of COVID-19 illness.
Among other things, Dmytro Derevyskyi positively notes the development of online sales and contactless payments. The company is launching a number of initiatives that meet the new needs of consumers: its own home delivery service “Allo-Express”, free disinfection of customers’ smartphones in stores, video consulting clients of Allo and more.
Alla Savchenko, President of BDO Ukraine, International Audit Company, recommends focusing on high-quality global sources, such as the World Economic Outlook. Their forecasts are quite optimistic.
The basic forecast of the world economy in 2020: a fall of 3%, but it is planned to grow in 2021. Developed economies will fall by 6% and developing Europe – by 5.2%. Ukraine is projected to fall by 7.7% this year and 3.6% in the next, if pandemic control and cooperation with the IMF are established.
A risk still to be considered especially for medium and large enterprises is the issue of cybersecurity, the number of attacks on critical enterprises and their consequences.
BDO Ukraine has an annual scenario planning practice that addresses at least 3 different scenarios. The company is now forced to review the scripts on a weekly basis, depending on the situation.
“Is quarantine a force majeure?” – the question most frequently asked by clients of lawyers, notes Oleksandr Bondarchuk, Managing Partner of Absolut Law Firm.
Even under quarantine, a law firm has a lot of work to do. Online consultations are currently underway.
On the one hand, there has been a sharp slowdown in the judicial system, which has led to a reduction in the employment of judicial lawyers, and on the other, due to the active involvement of law enforcement agencies, there has been a lot of work for criminal lawyers.
The number of requests from business representatives for registration of employment relations with employees in terms of remote work, as well as for redundancies and layoffs, has increased significantly.
Trends of the future in legal practice, noted by Oleksandr Bondarchuk:
- advising the business on the development of redevelopment plans, not excluding the bankruptcy of enterprises;
- calculation of the risks of unfriendly takeovers due to existing forecasts of asset redistribution and aggressive takeovers.
But there are areas that, despite all circumstances, feel good and even show growth. Thus, Andriy Zdesenko, owner of Biosphere Corporation, Ukraine’s largest manufacturer and distributor of home care and personal care products, noted some positive changes for his business.
Currently, the Biosphere has started to export more actively than ever. Everything that was previously planned and developed has come to fruition: the corporation produces a much-needed product today that is currently lacking in the world – antibacterial wipes. The opportunity to enter the Baltic, German, Italian, British networks, and partly to the US market, has emerged. Due to new circumstances, production has been rebuilt to meet new conditions and needs, new products have emerged. The company has released “Freken Boxes” – a set of essential home and hygiene products that can be ordered online at Rozetka with free delivery to the door thanks to Nova Poshta.
For the corporation own specialists are valuable and it is not in plans to lose them. For those who work “at the forefront”, wages are increased to 50%.
At the same time, there are problems with raw materials, as 80% of it is imported and there are major supply disruptions due to quarantine measures in the world.
Dmytro Kysylevsky, MP of Ukraine, spoke about the activity of the Foundation Vidrodzhennia Regionu, founded on the initiative of Interpipe and supported by the Dnipropetrovsk Regional State Administration. Already more than UAH 6 million has been raised from contributions from business, except for USD 2 million and UAH 35 million allocated by Interpipe; necessary staff for medical institutions in the region is constantly being purchased.
Dmytro also spoke about the state’s fight against COVID-19. Thus, after approval of the budget, a fund to combat coronavirus in the amount of UAH 65 billion was created, UAH 30 billion was allocated – for indexing pensions and additional payments to pensioners. Credit program 579 has changed and its purpose is to continue lending and refinancing loans to micro and small businesses at 0%. Also the initiatives to support mid-business and industry are being developed.
On behalf of the European Business Association Dnipro Office, we thank the speakers for the interesting dialogue and useful business insights!