Here, CEO Andriy Ozeychuk offers his insights on Rauta’s wartime strategy and the current insulation market outlook, looking ahead to consider Ukraine’s eventual full recovery.
Rauta is the leading supplier and installer of insulation panels and other critical building products to the Ukraine market. The company has overhauled its operations amid severe disturbances since the start of Russia’s on-going invasion of Ukraine in February 2022.
Andriy Ozeychuk has served as CEO of Rauta since 2014 and has overseen major transformations in the business. He was previously Business Director, Commercial Construction, of Finland-based building products manufacturer Ruukki Ukraine, where he was responsible for sales and marketing, purchasing, logistics and research & development for insulation and other products. Ozeychuk holds Master’s of Business Administration degrees from Carnegie Mellon University in Pittsburgh, US, and MIM-Kyiv Business School and a Master’s in Construction and Chemical Engineering from Kyiv National University of Construction and Architecture. Since 2017, he has served as Chair of the Ukrainian Steel Construction Centre.
Please would you introduce Rauta?
Rauta supplies sandwich panels, ventilated façade cladding and prefabricated buildings for the Ukrainian and EU markets.
With the beginning of the active phase of Russia’s war at the end of February 2022, there was a significant decrease in demand for Rauta’s products. At the same time, customers began to send us requests for the restoration of buildings destroyed during the military operations. We already had a deep understanding of reconstruction technologies. The full-scale war forced us to reorientate ourselves from a supplier of materials to a full-fledged construction contractor. By the end of 2022, we had implemented seven reconstruction projects. In 2024, the share of construction services in Rauta’s revenues increased to 45%.
How has Rauta’s expertise supported reconstruction work?
In early 2022, when work on major construction projects was temporarily suspended, the company’s specialists developed a technology to build frameless houses from sandwich panels. It can be used for the ultra-fast construction of single-storey residential and commercial buildings. Another company innovation was a technology to erect multi-storey buildings with sandwich panels as external walls. Besides accelerating reconstruction, this also allows developers to receive about 11% additional profit.
What trends prevail in the Ukrainian construction market?
Currently, demand in the Ukrainian construction market remains at a relatively low level. In 2024, the market volume increased by 9.5% year-on-year in Euro, to €4.6bn.
This is still significantly below 2021 levels, when revenues from construction products reached €8bn. Under conditions of positive growth dynamics, the Ukrainian construction market may reach previous peak levels from 2021 in 4 – 5 years.
Over the past three years of full-scale invasion, the cost of construction increased by 70% in local currency (Ukrainian Hryvnias – UAH), and by 24% in Euros.
In 2024, the total area of new commercial construction projects increased by 54% year-on-year. Hotel real estate showed the greatest growth, of 182% year-on-year. This is primarily due to the on-going development of new resorts in Western Ukraine. The other main segments were industrial and agricultural buildings and warehouses. The warehouse segment more than doubled, and retail grew by 5%. Kyiv and Lviv Oblasts, which have large populations and good locations relative to major transport routes, remain the most attractive for new developments of this type.
A vacancy rate of 25% in the office real estate market forced developers to slow down or suspend the development of new projects in this segment. In Kyiv, the majority of newly-built business centres had started construction before the full-scale invasion began. In Lviv, despite an increased demand for offices, 75% less new office space was commissioned in 2024 than a year earlier.
About 20% of the entire construction market consists of the restoration and protection of critical infrastructure buildings and structures.
Map of Ukraine, showing five macro-regions and their largest cities.
What specific challenges confront the construction sector in Ukraine?
A lack of qualified personnel and high inflation rates are forcing employers to raise salaries and introduce new loyalty programmes for employees. From 2022 to 2024, construction industry salaries recorded a composite annual growth rate of 20% in UAH and 8% in Euros.
Today, Ukrainian construction companies are recruiting older people and women to perform work that does not require ‘significant’ physical exertion: as engineers, foremen, construction equipment operators, drivers and welders.
What shape is the insulation market in?
In 2022, the market for mineral wool insulation decreased by 19% year-on-year in Euros, but in 2023 it showed growth of 34%. The results for 2024 show an increase of 3% in Euros, with around 22Mm2.
In 2020 – 2024, the share of imported mineral wool in the segment was 17-20%.
How do international finance arrangements impact Rauta?
International financial organisations and construction corporations plan to join the reconstruction and are gradually entering the Ukrainian market, establishing cooperation with government authorities and forming partnerships with Ukrainian construction companies. Because we were already well-versed in European norms and Ukrainian building codes, this made Rauta a reliable partner in implementing projects for foreign investors.
For instance, in 2023 we designed and supplied structures for the renovation of a nursery in Kyiv Oblast, which was financed by an EU grant.
How is the building materials sector aligning with Ukraine’s 2050 Net Zero commitment?
On 1 September 2022, Ukrainian Building Codes V.2.6-31:2021 Thermal Insulation and Energy Efficiency of Buildings came into force, increasing the energy efficiency requirements of new building envelopes by an average of 28%. This contributed to an increase in the use of insulation.
Building materials suppliers are gradually introducing technologies for recycling concrete residues generated by the destruction of buildings in the war. Leading producers are starting to use renewable energy sources and technologies that do not use fossil fuels. However, most companies remain exclusively focused on survival.
Some property developers – foreign investors in particular – encourage producers to decarbonise by using materials with environmental certifications such as Building Research Establishment Environmental Assessment Method (BREEAM) or Leadership in Energy and Environmental Design (LEED) in their projects.
How can policy help to ensure successful replenishment of Ukraine’s housing stock and infrastructure?
The state can become a developer of affordable housing and create effective financial instruments which allow as many people as possible to be able to afford to purchase or rent such housing. Old housing stock (some 45,000 residential buildings) constitutes 80% of all housing. The implementation of a programme to renovate this could become an engine for the development of the post-war construction industry.
The state can attract increased international investments and grants for the restoration and construction of new schools, hospitals and leisure facilities, as well as for the restoration of roads, bridges and utilities networks, by simplifying permitting procedures and combatting corruption. This would also reduce the cost and lead time of projects.
After Ukraine’s victory, what trend would you forecast for the insulation market up to 2050?
Rauta experts expect the demand for mineral wool insulation to be about 50Mm2/yr during the period of reconstruction. Today, Ukraine’s nine mineral wool producers have a total capacity of about 35Mm2/yr – 70% of anticipated demand. Producers IZOVAT and Kingspan are planning to build new plants with a total capacity of 20Mm2/yr. The implementation of these projects will allow Ukraine to more or less satisfy its domestic demand.
Andriy, thank you and slava Ukraini!
Heroyam slava!
Interview by Jacob Winskell
Global Gypsum & Light Building Materials
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