Page 112 - RusRPTApr20

Russia's largest retailer X5 Group reported IFRS results for 4Q19, showing 11% growth in revenues due to 2.3% y/y gain in like-for-like sales and 17.6% boost in selling space. However, the Ebitda missed consensus expectations by 3%, declining by 3.4% and pushing the margin down to 6% from 7% seen in the same quarter of 2018. X5 earnings were impaired by RUB969mn loss from the transformation of its hypermarket format Karusel. As a result, in addition to other non-deductible expenses, net profit of the company dived 89% y/y in 4Q19. "The results were hit by continued negative effect from Karusel's transformation and large non-deductible expenses, including tax accrual related to X5's reorganisation," BCS Global Markets commented on March 19. The board of X5 recommended a dividend for 2019 at RUB110.5 per global depository receipt (7% above BCS expectations), implying a moderate 6.3% dividend yield. Total dividend payments will amount to RUB30bn in total, which represents a 115.8% of consolidated net profit of the retailer for 2019. BCS Global Markets suggests to focus on 2020 guidance, including EBITDA margin and plans for store expansion, strategy update, including new initiatives, data-analysis progress, and changes in consumer behavior. The analysts maintain a Hold recommendation for the name with target price of $37 per depository receipt.
9.2.6 Agriculture corporate news
RusAgro’s 4Q19 operating results were mixed, as it continued to show growing volumes whilst suffering from the soft pricing environment. Total revenues increased 13% y/y to RUB45bn, reflecting the 2.1x y/y surge in volumes of sugar sold and the 53% y/y increase in oil & fats sales. The contribution of the lower-margin vegetable oil segment decreased slightly from the start of the year, but continued to represent 40% of total revenues. The prices for sugar, livestock pork and grain declined 37% y/y, 16% y/y and 21% y/y, respectively, due to the high base, the y/y harvest recovery, and the significant oversupply of sugar. The latter is a prime concerns for the current marketing year, and is likely to jeopardise the financial results of sugar refineries and beet growers in Russia. Analysts do not envisage a rapid recovery in sugar prices in the near term.
One of Russia’s top retailers, Magnit, plans to increase vegetable production in its greenhouse complexes by 30% in 2020, while also being set on increasing direct purchases from Russian producers by 80%, Potato System reports. According to the company, this will help reduce the retail chain’s dependence on imported products. In 2020, Magnit plans to launch the first phase of the greenhouse complex in the Krasnodar Territory, where they will grow tomatoes and cucumbers for delivery to network stores. As noted, the opening of such a complex will allow the company to increase its own production of tomatoes by almost 70% and cucumbers by 20%. Products from the greenhouse complexes of the Magnit distribution network are sold under the brand name “Magnet Freshness”.
9.2.7 TMT corporate news
EPAM’s top line increased 25% y/y to $632mn, 2% above consensus. NonGAAP operating income expanded 16% y/y, 1% above consensus. Non- GAAP adjusted net income rose +21% y/y, 4% above consensus.
Mail.ru Group's 4Q19 results and 2020 guidance under management accounts
112 RUSSIA Country Report April 2020 www.intellinews.com