By Marc Jones and Olena Harmash
KYIV/LONDON (Reuters) - German supermarket chain Metro and its 3,400 employees in Ukraine have worked hard to get their business back to where it was before Russia's full-scale invasion two years ago. After a sales slump of 10.4% in 2022 - when the overall economy collapsed by almost a third as war caused havoc - revenue rebounded by almost the same amount last year as domestic consumption recovered. Now Metro faces a new test, as protests by Polish farmers blockading the borders with Ukraine disrupt supplies coming in - one of several challenges foreign and domestic firms face as they navigate doing business in a country at war. "The war has taught us to respond flexibly," Olena Vdowychenko, head of the supermarket giant's Ukraine business, told Reuters. According to Vdowychenko, around 18 of her company's trucks have been stuck each week at the Polish border in recent months, sometimes for three to four days. "This is a big problem for Ukrainian businesses," she said, explaining it was pushing up costs everywhere. Capital controls restricting the movement of profits out of the country, difficulties in getting insurance and wavering U.S. financial and military support have been issues for corporate Ukraine for months, if not longer. To make matters worse, border disruptions in 2023 by Polish truckers have been replaced by similar actions by farmers upset at cheap Ukrainian grain taking their market share. Russia's military also has the upper hand in the battlefield in the east and south, putting key mining operations out of action or at risk, and a new mobilisation bill aimed at recruiting up to 500,000 more Ukrainians threatens staff levels.
POINT OF NO RETURN? Some smaller companies say an accumulation of problems has brought operations in Ukraine to the brink of collapse. The owner of one UK-based clothing manufacturer, who did not want to be named because of commercial sensitivities, said the business had been impacted by border protests, customer confidence and insurance issues to the point where operations in Ukraine were at risk. "Now we are at the point where we don't think we can continue," said the owner, adding that the company had been active in Ukraine for 25 years. "We are still trying though." Others, mainly larger firms and foreign operators, are not sounding the alarm bells yet, although some have relocated away from the frontlines and there are major Ukrainian corporations who have defaulted on debt. A recent American Chamber of Commerce in Ukraine study estimated that only 2% of firms had closed and another 10% had been severely affected since 2022, based on a survey of 125 members who are mostly larger multinationals and bigger Ukrainian companies. "Multinationals are not leaving," said Alfonso Garcia Mora, a regional vice president at the International Finance Corporation, which is part of the World Bank group, whose recent surveys tell a similar story. "They have really held in there as much as they can." He added that one reason was that some firms, especially the big agricultural companies, simply couldn't do what they do outside of Ukraine.