Deoleo, the oil maker that triggers the profits from the war in Ukraine

MADRIDThe Ukrainian war has targeted products such as wheat, corn and seeds for making sunflower oil. An important part of the origin of these three foods in Spain, but also in Europe as a whole, is Ukrainian, to the point that in the country it is called the barn of Europe. It is for this reason that in the midst of the Russian invasion many supermarkets have limited the sale of sunflower oil and some chains have seen stocks run out in the face of the possibility of a shortage. Ukraine is one of the main suppliers of sunflower seeds in Spain, and there was a growing fear among the population that production would stop due to a lack of raw materials.

However, not everyone has experienced this situation with their senses on alert. The war has turned into an opportunity for some companies, which have squeezed the boom of these products into the stock market. This is the case of the Spanish olive oil manufacturer Deoleo, the largest in the world, whose stock market value has inflated by 42% this week. The company, which produces brands such as Carbonell and Koipe, has seen investors cheer on expectations that growing demand for olive oil is due to a shortage of sunflower oil due to the government’s veto. Ukrainian Volodymyr Zelensky has put until the end of the year the export of various Ukrainian cereals, sugar, meat and salt.

Thus, this Friday Deoleo shares climbed to € 0.37, 10.8% more than on Thursday. This company jumped on the stock market the day following the outbreak of war. On February 25, the value of its shares on the stock exchange grew by 18%, a figure that offset the fall of the previous day. The major leap, however, came on March 4th. That day the price of the stock closed at € 0.27 (until then, despite the start of the war in Ukraine, it remained stable) but the next day it exceeded € 0.34.

The pandemic, a shock

But this is not the only difficult time the company has been able to take advantage of. The pandemic was also a turning point for the oil manufacturer, which closed 2021 with a net profit of 61 million euros and reduced debt to 120 million even though sales volume fell. In the first year of the pandemic, marked by the strictest confinement, the company managed to leave behind the losses (11 million euros in 2019) and obtained a net profit of 57 million. However, with the resumption of economic activity, the demand for olive oil in households returned to normal.

But not everything has been easy: last year Deoleo suffered an increase in the price of raw materials, the price of which doubled compared to the previous year, which forced him to assume an additional 90 million euros to cover those costs that had no budget, according to the same company.

Against the ropes

The company has also been in the media spotlight. In 2014, the Spain brand was on the verge of losing this world leader in olive oil and one of the main exporting groups in the food sector in Spain – of the two million tons of oil it produced , only half a million remained in Spain. The reason? A group of shareholders, including Bankia and La Caixa, sold 31% of their capital, while other international investors were interested in the company. The concern of the then Spanish government, under the leadership of the popular Mariano Rajoy, was that the “Spanishness” of the group would be lost, in the words of the then Minister of Agriculture, Miguel Arias Cañete. That is why the Spanish government set up all the machinery so that the minority shareholders would have control of the company and might even be joined by SEPI, the company that groups the state’s industrial holdings. Finally, Bankia was left alone, the British fund CVC acquired 20% of the shares but Cañete managed to convince the president of La Caixa, Isidre Fainé, for the bank to guarantee that control of Deoleo remained in Spanish hands.