Page 199 - RusRPTMay21

its production mix, meaning a significant increase in the realized price and profitability. At the current LFL index, we calculate the average price for Alrosa's production mix at around $100/ct, or 30% above the 1Q21 average selling price. Furthermore, low inventories of rough diamonds among producers and still-strong end demand provide more upside for Alrosa's LFL index, in our view.
We expect yet another strong set of financials for 1Q21, with $470mn in EBITDA, up 12% Q-o-Q. A big inventory release and seasonally low capex should support FCF, which could reach $600mn for a 6% yield. Alrosa will report 1Q21 IFRS results on May 18. The announcement date for the 2H20 dividends should be sometime at the end of April. We expect an 80% payout from 2H20 FCF for around a R70bn total payment, which would be around $900-950mn (depending on FX) for a 9% yield.
● Steel
Novolipetsk Mining Kombinat (NLMK) reported a strong set of 1Q21 results on April 22 that were supported by strong steel prices. EBITDA was up 31% QoQ for the quarter, while FCF nearly doubled (+97% QoQ).
NLMK’s BoD recommended paying out a 1Q21 DPS of RUB 7.71/share, implying a dividend yield of 2.9%. The company sees the strong pricing outlook and seasonal recovery in demand as positive factors for 2Q21.
NLMK reported a strong set of 1Q21 results today. Revenue was up 20% QoQ thanks to strong steel prices despite the 7% QoQ drop in sales volumes. EBITDA rose 31% QoQ, pushing the EBITDA margin up to 41% vs. 37% in 4Q20. FCF nearly doubled (+97% QoQ), while the company’s end-1Q21 net debt was down 16% QoQ, lowering its end-1Q21 ND/EBITDA to 0.65x vs. 0.94x at the end of 4Q20. Asides from FCF (-27%), the reported results differed by up to 5% against our forecast.
NLMK’s BoD recommended paying out a 1Q21 DPS of RUB 7.71/share, which translates into a dividend yield of 2.9%. The recommended record date is set for 23 June. We note that the company recommended allocating approximately 135% of its 1Q21 FCF to dividends, which is fully in line with NLMK’s dividend policy. The company sees the strong pricing outlook and seasonal recovery in demand as positive factors for 2Q21.
Magnitogorsk Iron and Steel Works (MMK) has reported strong earnings for 1Q21, thanks to lower capex, and a generous dividend despite a working capital build-up. The company’s positive outlook on volumes, mix and prices
199 RUSSIA Country Report May 2021 www.intellinews.com