Page 101 - bne IntelliNews Country Report: Russia Dec17

Gazprombank, which resulted in the net profit beating the banks forecast. Company's revenues declined by 17% q/q to RUB58.9bn, 3.5% above the Interfax consensus. Ebitda declined by 28% q/q to RUB27.2bn, at a margin of 46% in line with analyst expectations. Alrosa posted free cash flow of RUB4.8bn and increased net debt from 0.3x to 0.7x as of end of the third quarter.
Russian fertilizer major EuroChem launched a subsidiary in Bulgaria on the basis of local fertilizer producer Agricola Bulgaria, which EuroChem acquired in March, the company said on November 15. With the Bulgarian operations, EuroChem looks to expand its distribution network in Eastern Europe. “EuroChem is planning to develop fertilizer production facilities in Bulgaria to facilitate distribution of new premium products to the country’s farmers, and it is investing in research and development to trial these new products in Bulgaria,” the company said in the statement. Fitch Ratings affirmed the long-term Issuer Default Rating (IDR) of Swiss- and Russia-based EuroChem at 'BB', with Negative outlook on November 2.
Uncertainty over the fate of Russia’s diamond mine monopolist Alrosa was reduced after a report from the industry watch dog exonerated the company from wrongdoing . Eight miners were killed when the company’s flagship Mir mine flooded in the summer. Rostekhnadzor released a report on November 16 saying the company was not responsible for the accident and no action will be taken by the authorities. The company management said in a statement that the mine will be shut for several years, but investors have welcomed the report and statements as there is now “substantially more clarity” over the company’s future, analysts said. The diamond miner has underperformed the MICEX metal and mining index by 30% since July and trades at 4.5x FY18E EV/EBITDA offering an 8% dividend yield for FY17, reports VTB Capital (VTBC), which marked the stock up to a Buy again following the report’s release. Increased certainty also means that another SPO of 4% of the company’s stock could be back on the agenda, but not in the short-term.
Russian diamond mining monopoly Alrosa will have to indefinitely halt works at its mine Mir in the wake of a flooding incident that killed eight earlier this year, Rostekhnadzor, Russia's industrial safety watchdog has demanded. The watchdog said the incident was due to hydrogeological, technical and engineering problems on Alrosa's part. Alrosa's economic loss from the incident amounted to RUB10.2bn ($172.4mn), Rostekhnadzor said. "The fact that Rostekhnadzor has named organisational problems as one of the main reasons for the accident, resulting in the personal responsibility of employees, means that the risk of fines and penalties has almost vanished," VTB Capital said in a research note. "Thus, we do not see it fundamentally impacting the name in a significant way." "The announced amount of the loss is in line with previous comments by CEO Sergey Ivanov and our expectations," VTB Capital went on to say. "Although the watchdog has ordered that work at the mine be halted indefinitely, Ivanov believes the company will be able to restart it in several years, after the violations have been eliminated. Meanwhile, Alrosa also ordered an independent audit of the accident from SRK Consulting and expects to receive the results by the end of the year.
Alrosa has reported positive 3Q17 earnings, as net income outperformed our estimates on a lower than expected Mir mine impairment of RUB 7bn.
101 RUSSIA Country Report December 2017 www.intellinews.com