Page 14 - bne_newspaper_May_10_2019

bne Invest
May 10, 2019 www.intellinews.com I Page 14
Russia's privately owned oil major Surgutneftegaz makes more profit from its cash pile than producing oil
Russia's privately owned oil major SurgutNefteGaz (Surgut) made more profit from its enormous cash pile than it did from producing oil in 2018, the company reported last week.
The famously opaque company that is nevertheless close to the Kremlin, posted 4.4-fold net profit jump in 2018 to RUB850bn ($13bn) under IFRS. Surgut made one of the largest corporate profits in the country, second to only RUB1.5 trillion of Gazprom and beating other oil majors Rosneft and Lukoil.
Notably, 51% of pre-tax profit was due to RUB529.4bn currency revaluation gain on Surgut's massive and notorious cash pile. Surgut's currency gain was more than that of all other oil major put together (RUB222bn of Gazprom, RUB bn of Ros- neft, RUB33.8bn for Lukoil, RUB7.9bn for Tatneft).
In 2018 the cash pile of the company grew by 32% to over RUB3 trillion, making the highest value since 2013. As reported by bne IntelliNews, the company's cash reserves are almost on par with the funds kept in the sovereign National Welfare Fund.
Under the current dividend strategy of 10% of net profit, Surgut is supposed to pay over RUB80bn in dividends for 2018, out of which RUB58.7bn
on preferred shares. About three quarters of
the dividend payments is due to the profits the company makes on investing its cash pile, with the rest from oil production and in this sense it is more like investing into a bank than an oil company.
Read the full story here
Aluminium exports on the rise as Rusal continues post-sanction rebound
One of world's largest aluminium producers, Rusal, increased exports of the metal from Russia by 28% year-on-year to 0.99mn tonnes in January-April, Interfax reported citing data from Russian Railways. In April 2019 alone the exports of aluminium soared by 238% y/y.
Rusal is rebounding after in February, the US Treasury Department Office of Foreign Assets Control (OFAC) removed the company and other assets of Russian billionaire and Kremlin insider Oleg Deripaska from the US Specially Designated Nationals And Blocked Persons List (SDN List).
"Export volumes continued to bounce back," BCS
Global Markets commented on May 7, expecting the 2Q19 financials and trading updates to be the main positive catalysts after a weak 1Q19 for Rusal.
As reported by bne IntelliNews, the credit ratings of the company remained intact after almost a year of sanctions and in April Rusal placed its first domestic bonds since 2016.
In March Fitch Ratings assigned Rusal a long- term Issuer Default Rating (IDR) of 'BB-', with a stable outlook. Subsequently, in April, Rusal had the Ba3 credit rating assigned by Moody's Investors Service, with B1 rating for its credit notes and stable outlook.