Page 115 - RusRPTApr20

year-on-year gain in Ebitda despite 4% y/y decline in revenues, while containing the net income decline by 2% y/y (beating expectations of BCS Global Markets by 29%). As reported by bne IntelliNews, Russian utility majors are in focus as the sector is set to continue to rally in 2020. More place for upside for certain names is seen coming from expected profitability gains, while the utility sector at large is seen as safe haven against turbulence caused by the Coronavirus and tumbling oil prices. Sberbank CIB argued that Unipro and other utility names with fixed dividends should be most resilient if risk sentiment remains dampened for longer. Unipro followed its largest shareholder Fortum in adopting 100% dividend payout in 2018. Upon the publication of the 4Q19 results, Unipro reiterated the dividend policy, pledging to pay RUB20bn in dividends for 2020-2022 in total (RUB7bn (4% dividend yield) in June-July 2020 and RUB13bn (7% DY) in December 2020).
InterRAO’s FY19 IFRS results came in line with our expectations and slightly exceeded the company’s EBITDA guidance. Total revenues printed at RUB1,032bn, up 7% y/y while adjusted EBITDA increased 17% y/y (the maximum guidance growth was 15%), supported by RSV prices, delta-DPM, Kaliningrad CHPs lease and the sustainable supply business. That was 1-2% higher than our forecast and the Interfax consensus. Net income was traditionally supported by finance income, driving overall net income up 14% y/y to RUB81,930mn.
Sanctioned Russian machinery and engineering major Power Machines (Silovie Machini) of steel tycoon Alexei Mordashov announced it will sell its 35% stake in Siemens Gas Turbines Technologies joint venture with Siemens, Reuters reported citing the representatives of the German engineering major. As reported by bne IntelliNews, the problems between the Power Machines and Siemens started after a scandal over the supply of two Siemens gas turbines to power plants on annexed Crimea peninsula, that got Power Machines sanctioned. The JV operates the only plant in Russia producing gas turbines for power generation (currently 50% of Russia's electric energy is being generated at gas power stations). Power Machines has repeatedly urged authorities to divest lucrative state contracts for gas turbines away from foreign companies like Siemens. However, it is most likely that Siemens will remain the main supplier of turbines in Russia. Despite the Crimea embarrassment, Siemens has reiterated its readiness to participate in the Russian state power capacity modernisation programme and even localise 90% of the production of the turbines, as required by the Kremlin. It is not yet clear whether Siemens will have to buy out the stake of Power Machines in the joint venture. Analysts surveyed by Reuters warn that the deal carries high sanction risks.
9.2.11 Metallurgy & mining corporate news
● Gold & Diamonds
Polyus Gold’s EBITDA of $877mn matched our expectations and consensus, while adjusted net income was 5-11% below because of the higher than we expected income tax incurred in 4Q19. FCFE of $423mn exceeded our expectations by 19%, thanks to a lower working capital build-up than we expected, although net debt was in line, compensated by the outflow on derivatives.
Alrosa saw January sales of rough diamonds of $390mn were up 40% y/y
115 RUSSIA Country Report April 2020 www.intellinews.com