Page 104 - RusRPTMar20

phosphate market was expected to come under pressure​, due to low prices of phosphate-based fertilizers, off-season in key markets, combined with high stockpiles in India and the US. For 4Q19 Phosagro posted negative free cash flow of RUB4.3bn, but still recommended dividends of RUB 18/share (a 0.7% DY), with the total payout accounting for 93% of net income and being the highest in the company’s history.
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Russian metals major ​Norilsk Nickel​ reported 2H19 IFRS results, ​which showed 16% half-on-half rise in revenues to $7.3bn, the company reported on February 26. Ebitda increased by 13% h/h to $4.2bn on maintaining flat costs in 2019, while net income was up 19% h/h to $2.7bn. The top and bottom lines in 2H19 beat consensus expectations by 4%. The company brought capital expenditure to the lower end of its guidance for 2019 at $1.3bn, boosting the free cash flow to $2.7bn for 2H19 and $4.8bn for 2019. Net debt/Ebitda ratio decreased to 0.9x as of end of 2019. The company also decreased CapEx guidance for 2020 from $2.5-2.8bn announced at the capital markets day to $2.2-2.5bn.
Russian metals major ​Norilsk Nickel​ asked the government for support for its infrastructure investment, as well as exploration expenses, Kommersant daily reported citing unnamed sources. Reportedly, the company has requested the government take on half of the cost of renovating Norilsk housing stock in the amount of RUB85bn by 2030, to subsidize the loan rate not only for the ice-class vessels, but also for improving port infrastructure.
Rusal​’s Aluminium production in 4Q19 was almost flat q/q at 949 kt, with capacity utilization at 97%. ​Aluminium sales rose 1.5% q/q to 1,107 kt, bringing the full-year figure to almost 4.2mn tonnes, up 14% y/y and 5.5% from the pre-sanctions level of 2017. VAP sales were up 3.1% q/q to 443 kt, while the share of VAP in the sales mix increased 1 pp q/q to 40%. Sales of VAP in 4Q19 were just 5.5% below the pre-sanctions levels of 2017, when Rusal posted average quarterly VAP sales of 469 kt. Full-year VAP sales were 1.55mn tonnes, or 37% of sales, just 1 pp below our forecast. The average realized price decreased 1.2% q/q to $1,873/tonne in 4Q19 as a result of a decrease in the LME price (down 1.2% q/q to $1,730/tonne). The commodity premium component was also down 6.5% q/q to $74/tonne, though this was offset by a 5.5% q/q increase in the VAP upcharge component. The overall premium was thus almost flat q/q at $143/tonne.
Rusal​ has suspended its bauxite operations in Guyana due to the unrest there​, according to a company press release. The company has not stated how long the suspension might last, but noted that it might potentially offset the fall in bauxite production from Guyana using other assets. The facilities in Guyana produce only 1.4mnt of bauxite per year and are UC Rusal’s smallest bauxite operations (accounting for 8.5% of total bauxite production). Based on the company’s average cost of $30/t for bauxite mining, analysts estimate that the asset might account for 2% of 2019E EBITDA. There is no clarity on how long the stoppage could potentially last.
Norilsk Nickel​ has reported a solid 4Q19 trading update​, beating VTBC estimates of copper, palladium and platinum output by 5-8% and the FY19 production guidance on those metals by 3-6%. Nickel output was down slightly y/y, though it was still at the top end of the FY19 guidance. We expect the
104​ RUSSIA Country Report​ March 2020 ​ ​www.intellinews.com