Page 114 - RusRPTApr19

Mir results and dividend proposal.
9.2.6 Agriculture corporate news
Russian agricultural group Rusago reported an IFRS Ebitda of RUB5.8bn in the fourth quarter of 2018, adding 8% year-on-year and making a 19% margin. All of the segments of Rusagro saw growth in both sales and earnings in the reporting quarter, except for the sugar division. A leader in the sector, the company has ambitious plans as bne IntelliNews detailed in a profile of the company "INTERVIEW: Salad days for Rusagro" but has been somewhat battered by market forces and the volatility in the price of sugar in particular. The sugar division's Ebitda declined 50% y/y to RUB1.3bn as the sales volumes of sugar almost halved on the anticipated price increase. In the meantime increased grain prices has brought the agriculture division's Ebitda from almost zero at the end of 2017 to RUB3.9bn in 4Q18 at a 29% margin. Higher grain prices, however, have increased the costs for the meat division, which posted flat Ebitda growth y/y at RUB1.8bn. The oil and fats segment segment more than doubled sales volumes and posted a 70% Ebitda y/y jump in 4Q18. Rusagro most recently acquired a major oil producer Solnechnye Produkty and revealed the volume of the deal, which stood at RUB20bn. The company also invested RUB9bn of working capital into Solnechnye Produkty operations. "Given that the results fell generally in line with our expectations and the Solnechnye Produkty deal was closed at a fair price, we think the results are neutral for the share price," Sberbank CIB commented on March 15. Rusagro benefits from currently high commodity prices, but Sberbank believes this is already priced in and believes the 3Q-4Q19 results will depend on the 2019 harvest. In the meantime, Rusagro recommended a RUB3.5bn dividend for 2H18 ($0.4 per GDR for a 3.3% dividend yield). "Given that R1.0 bln was distributed for 1H18, this implies a 35% payout for the full year (versus 73% in 2017)," Sberbank estimated.
9.2.7 TMT corporate news
Russian internet major Mail.ru reported 34% year-on-year increase in revenues to RUB23.4bn ($356mn) in the fourth quarter of 2018, with Ebitda at 42% growth to RUB8.7bn in line with company's own guidance and market expectations. Mail.ru is one of the largest Russia's internet groups and the central player in consolidation of country's digital economy. The company is forming a strategic partnership of its shareholder mobile operator MegaFon, the sovereign Russian Direct Investment Fund (RDIF), and Chinese e- commerce major Alibaba and its AliExpress and Tmall platforms. Sberbank CIB on March 4 named the closure of the AliExpress Russia deal (albeit delayed by a few months) as the main short-term catalysts for Mail.ru stock, along with expected spin-off of Delivery Club delivery service and Youla classifieds website. Delivery Club accelerated the revenue growth to 71% y/y in 4Q18, while Youla tipped over RUB1bn of revenues at RUB1.2bn. At the same time key growth drivers for Mail.ru remained ad revenue (up 38% y/y) and games (up 37% y/y with top performing title Hustle Castle). Sberbank CIB estimated that advertising revenues of Mail.ru grew ahead of the market in the reporting quarter. "On the positive side, user engagement at VK is continuing to grow as expressed by a growing number of daily comments and stories, as well as videos viewed," Sberbank CIB commented reminding that Mai.ru expects social commerce to become a key element of VKontakte going forward. The company expects 2019 revenue growth of 18-22% to RUB85-
114 RUSSIA Country Report April 2019 www.intellinews.com