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on the weak base of last year, but also 19% above the historical average for January, signalling a return to healthy seasonal restocking in the midstream. We think that the y/y mix improvement continued in January from 4Q19, so analysts continue to expect 1Q20 average gem-quality price to be up y/y, despite the negative 8% y/y contribution from lower index. Even if February- March sales stay at their historical average ($450-500mn/month), analysts see some 15-20% upside to 1Q20 revenue estimate for Alrosa.
Petropavlovsk has reached an agreement with the owner of 25% in Elginskoye, under, which, if Petropavlovsk purchases a 25% stake with its own new shares, the share price of Petropavlovsk is fixed at GBp 17.9/share under an exchange rate of 1.3206 $per 1 GBP. The other terms of Petropavlovsk’s potential acquisition of 25% in Elginskoye remain unchanged, including the $60mn consideration or a reduced $53.5mn consideration if the deal is finished before 20 May 2020. The deal might be subject to shareholder approval.
● Steel
Norilsk Nickel beat the 2H19 EBITDA consensus estimates by 5%, mainly thanks to higher revenues. Reported EBITDA of $4.20bn was in line with our estimates though, while we also note 5% higher revenues reported (vs. our estimates) thanks to higher volumes of PGM sales. The company's headline FCFF of $2.68bn exceeded our and the consensus estimates by 6-9%, thanks to much lower capex of $824mn in 2H19 (30% below our expectations). The FY19 capex of $1.3bn was also below the $2.2bn guidance provided during the 1H19 results.
Magnitogorsk Iron and Steel Works (MMK)’s EBITDA of $335mn matched consensus, but was 4% below our estimates on slightly lower non-core revenues in the steel segment. In the meantime, the slab cash cost of $283/t was slightly below our estimates. A positive surprise was the FCFE print of $272mn, beating our expectations by as much as 9%. This was achieved thanks to the larger working capital release and FY19 capex of $833mn being below recent guidance of $900mn. As such, the company continues to have a net cash position of $235mn (3Q19 - $70mn). The company announced 4Q19 DPS of RUB1.507 ($0.32/DR, 100% of FCFE).
Novolipetsk Metallurgical Kombinat (NLMK)’s EBITDA of $480mn beat consensus by 4% and our expectations by 7%, driven by a $30mn intersegment gain. Reported FCFE of $338mn exceeded our estimate strongly on the higher working capital release of as much as $334mn in 4Q19. This more than offset higher capex of $360mn, making the 2019 figure ($1.1bn) slightly above the $1bn guidance. The dividend payout of 100% of FCFE, adjusted for $700mn/a capex, yielded rich $500mn dividends.
Evraz delivered strong EBITDA of $1.13bn in 2H19, exceeding consensus and our estimates by 7-12% mainly on better revenues. A major positive surprise came from the FCFE print of $750mn and a strong dividend announcement of $580mn, exceeding our estimates by 1.7-1.9x. Higher FCFE was achieved mainly through higher EBITDA, better working capital release and lower capex of $762mn, below the $850mn guidance given during the investor day in October 2019.
Mechel’s debt restructuring talks with banks nearing end. Reuters reported. Furthermore, Mechel asked its creditors to extend a debt claim relief
116 RUSSIA Country Report April 2020 www.intellinews.com