Hungarian building materials manufacturer Masterplast Nyrt. saw its earnings fall in 2014 after the worsening Ukraine crisis forced it to write off investment plans for a new expanded polystyrene insulation plant in the country.
Sárszentmihály-based Masterplast reported its annual net income dropped by 38 percent to 749,000 euros ($840,000) last year. Without the enforced Ukraine write off, the company had expected its after-tax profit to reach 1.6 million euros ($1.79 million), it said.
Overall, Masterplast, with a growing string of plants in Eastern Europe, reported its 2014 sales flat at 81.6 million euros ($91.5 million) and saw its annual operating profit slip by 1 percent to 2.7 million euros ($3 million).
In 2013, the company revealed it intended to expand in Ukraine and Romania. In particular, it aimed to respond to huge demand for suitable thermal insulation in Ukraine where energy prices are rising and homes are poorly insulated against the extreme cold.
It planned to invest 1.4 million euros ($1.57 million) to set up a further EPS insulation panel facility at Lviv in the far west of the country where it had bought and converted existing industrial premises. The Hungarian firm expected to become Ukraine's third ranked player in the thermal insulation segment within three years, it said.
But early last year, Masterplast suspended its investment for the EPS and adhesives facility. With the situation deteriorating further since then, the company decided not to restart its expansion scheme until Ukraine's political and economic position stabilized.
Meanwhile, last month Masterplast signed a long-term strategic agreement with an unnamed Italian building materials producer and distributor. The deal will see the Italian firm buying at least 1 million square meters of its premium quality ‘Masternet' fiberglass mesh, used for strengthening exterior insulation and reinforcing interior plaster and coatings.
Masterplast expects to reach other agreements with several more western European customers in the near future, it said.