Doing business amid the crisis
For more than two months, the companies have been actively implementing changes in their operations to adapt to the new business environment. Thus, during the EBA Business Outlook: Rethinking Work Model, the heads of the EBA member companies shared their experience of doing business amid the lockdown, the opportunities that lockdown has brought to their companies, and plans to restore the pre-lockdown level of development.
David Mohren, CEO of Radisson Blu Hotel Kyiv City Center, recognized the need to adopt new requirements and standards of work. Thus, the hotel business is already introducing new procedures for cleaning and settling guests in compliance with the rules of personal protection. The partial recovery of the industry will be possible at the cost of domestic tourism. For example, Radisson Blu Resort in Bukovel is already 10-15% booked for June, while chain hotels in other cities will have low profitability for another 3-4 months. Also, due to the crisis, hotels were forced to reduce their staff by 10-15% and pay employees two-thirds of salaries.
Dmytro Shymkiv, Executive Chairman of Darnitsa Group, stated that the situation with the pharmaceutical industry is ambiguous. Sales growth lasted only the first two weeks of lockdown, then there was a slide down. Accordingly, the level of sales in April is 30% lower compared to the same period last year. At the same time, revenues in the pharmaceutical industry are 80% dependent on consumer behavior. Therefore, the company is currently actively implementing digital technologies to stimulate online sales and better monitor changes in consumer confidence. During the crisis, the company kept employees’ salaries unchanged and launched a new product line.
According to Mauro Longobardo, CEO of ArcelorMittal Kryvyi Rih, the continuous operation of his company is strategically important for the city of Kryvyi Rih. Thus, due to increased protection measures (temperature screening, express tests), there were only 3 cases of coronavirus among 30 thousand employees of the company. Even though 20% of workers were forced to take leave, the company continues its activities and produces the same volume of products as before lockdown. However, world commodity prices fell due to the crisis, so the company’s profitability declined significantly. Yet, the company expects to recover in the fourth quarter and plans to export 80% of its products.
Ihor Smilianskyi, General Director, Ukrposhta JSC, said that due to the pandemic, the number of internal parcels has increased. At the same time, there was a reduction in the number of international posts which accounted for 25% of the Ukrposhta revenues. In general, the revenues of the national post operator fell by 10% even though the company actively invested in IT and infrastructure. The return to the previous level of income depends on the resumption of passenger air traffic. Currently, Ukrposhta actively cooperates with manufacturers (including pharmaceutical companies), introduces digital signature technology, and helps Ukrainian entrepreneurs enter international markets with the E-Export school program.
The IT sector is growing although the rate has slowed almost twice. The industry managed to remain stable due to its diversification. For example, IT company Sigma Software is involved in projects in finance, e-commerce, automotive, aviation, etc. Valery Krasovsky, the company’s CEO and Co-Founder, said that some sectors have suspended the development of IT programs. However, Sigma Software grew rapidly during March, finding new international customers and increasing its staff. Before April, the company had offered 100 vacancies, but now the number fell to 25.
Ekaterina Glazovaya, the founder of the Kod Osobnyak showroom, the representative of the small business, has shared her experience in overcoming the crisis. During the lockdown, there was a lack of orders, and her business income was not enough to rent the premises. Therefore, Ms. Glazovaya decided to try another type of activity and develop her own courses in partnership with the educational online platform. The profits from the sale of online courses allowed her to repay debts and pay salaries to her employees. Therefore, Kateryna plans to scale her fashion business further through online channels.
On behalf of the European Business Association, we thank the speakers for valuable lessons and insights on doing business during the crisis! We hope that soon the economic situation in the country and in the world will stabilize and business will be able to fully resume its activities.