Page 117 - RusRPTApr20

deal. Mechel has been engaged in talks on restructuring since last year and could be asked to make repayment of up to RUB373.3bn ($4.73bn). The company agreed this year with its main creditors, Gazprombank and VTB, that they would not demand early repayments, but these debt claim relief deals were due to expire on 1 April and 31 March. Gazprombank said it was ready to extend the waiver by one more month, while VTB said it was considering Mechel’s request.
● Fertilisers
Phosagro‘s top line was down 11% y/y to RUB53.1bn (weak pricing and the stronger ruble offset higher sales volumes). EBITDA was down 40% y/y to RUB11.2bn (slightly above consensus and in line with our forecast). Adjusted net income down 77% y/y to RUB2.5bn (slightly below our estimate). Negative free cash flow of RUB4.3bn against negative RUB1.6bn in 4Q18 (we expected minus RUB3.8bn).
The investment case of Russian phosphate fertiliser major Phosagro remains solid, BCS Global Markets wrote on March 11 after hosting a meeting between local investors and company's CFO Alexander Sharabaiko, while affirming the Buy call on company's shares. As reported by bne IntelliNews, in 2019 Phosagro approved its new dividend policy, unveiled growth and spending plans aiming to boost European sales by 25% by 2025 and to go green. As of end of 2019 the 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. The company now expects an improvement of supply-demand balance in 2020, with inventories in India, China normalizing post highs of mid-2019, and the Coronavirus cutting global supply by 1.5mn-2mn tonnes in 2020. Additional support is expected from strong demand in the US, while the prices have already recovered to $305-310 per tonne from the $250 lows seen in 4Q19. Despite the low season, Phosagro is seeing solid demand in 1Q20, with the average prices in 1Q20 remaining above 4Q19. "As a result, 1Q20 results may show improvement of EBITDA q/q," BCS GM wrote, with the outlook fitting well into the analysts 2020 expectations.
● Other
Rusal had a good 4Q19, with aluminium production of 949kt slightly exceeding expectations, driven by slightly higher production at the Sayanogorsk smelter. Alumina output of 2.05mnt exceeded our estimates by 8% and was the highest since at least 2014, driven by stronger output at the Nikolaev and QAL smelters. As we expected, the company continued to sell- down aluminium from inventory, accumulated in 2018, selling an additional 90kt in 4Q19, on our numbers. VAP’s share in sales failed to recover QoQ, staying at 40%. This was the reason behind the 10% lower (vs. our expectations) aluminium premium of USD143/t.
9.2.12 Transport corporate news
Russian maritime shipping major Sovkomflot reported record-high profit of $225mn under IFRS in 2019, swinging from a loss of $45mn in 2018 and $113mn in 2017. The company's revenues were up by 10% to $1.66bn, and Ebitda jumped by 42% to $823mn. As reported by bne IntelliNews, state- owned Sovkomflot has been on the government's privatisation list since 2011.
117 RUSSIA Country Report April 2020 www.intellinews.com