Page 105 - RusRPTSept19

22% in June on strong first-quarter results, cementing its role as the innovation leader in the industry, but the rally has limited the 12-month upside and brought estimated excess return to minus 9%, BCS Global Markets argued on July 1. In August, the shares of X5 declined 5% off the peak values leading BCS to upgrade the name to Hold.
The net profit of Russia’s X5 Retail Group, the owner of Pyaterochka, Perekrestok and Karusel chains, rose 55.5% on the year to RUB13.508bn in April–June, as calculated under International Financial Reporting Standards (IFRS), the company said on August 15. Revenue increased 14.3% to RUB437.311bn. Earnings before interest, taxes, depreciation, and amortization (EBITDA) grew 25.2% to RUB36.135bn. Adjusted EBITDA grew 24.2% to RUB36.599bn.
Net IFRS profit of Russian shoe manufacturer and retailer Obuv Rossii (Shoes of Russia) dropped by 54% year-on-year in 2Q19 to RUB105bn, with Ebitda declining by 12% y/y and Ebitda margin falling 7.2pp (percentage points to 16.6%. BCS Global Markets on August 16 attributed the drop in profitability to gross margin contraction from 65% a year ago to 50% in the reporting quarter, seeing the results as negative. Buy recommendation on Obuv was nevertheless maintained with a target price of RUB150 per share. In line with previous trading update, Obuv's retail sales rose 26.7% year-on-year on 23% growth in selling space and 1.2% increase in like-for-like sales. Cash loans revenues kept on posting faster growth, up by 35.4% y/y to RUB489mn. The share of high-margin related products rose from 29.6% in 2Q18 to 31.9% in 2Q19, but the costs of goods sold rose 5.7% to 33.2% of revenues. Company's net debt also increased notably by 51% y/y to RUB9.5bn, with net debt to Ebitda rising from 2.5x a year ago to 3.1x in 2Q19.
9.2.6 Agriculture corporate news
Russian state-run bank VTB has completed its purchase of a 70% stake in local grain trader Mirogroup, expanding the lender’s diversification into the grain export business, the lender said on Thursday, according to Reuters. The expansion of VTB, the country’s second-largest lender, in grain export infrastructure in recent months has been seen by some traders as a sign of the Russian government tightening the grip over the sector. Russia is the world’s largest wheat exporter. “The acquisition of Mirogroup is an important step in the implementation of VTB’s grain market strategy,” VTB First Deputy Chief Executive Yuri Soloviev said in a statement. “By creating a trading and logistics infrastructure, the Bank will be able to sell grain of good quality on global markets directly to end consumers,” he added.
Russia's second-largest bank state-controlled VTB Bank continues to assert its grain exports ambitions, planning to enter African, Middle East, and Asian markets, Reuters reported citing deputy head of the bank Vitaly Sergeychuk. As reported by bne IntelliNews, VTB has been hoovering up assets in the grain export sector and now controls about a fifth of the business. The bank controls 50% minus one share in the United Grain Company (UGK/OZK), which was recently reported as competing for supply tenders in Egypt, one of the largest buyers of Russian grain.
RusAgro has released solid 2Q19 IFRS results that completed the farming year 2019 across key soft commodities. EBITDA grew 16% y/y, matching our estimates. The last season saw an improvement in the supply-
105 RUSSIA Country Report September 2019 www.intellinews.com