Page 111 - RUSRptSept18

another example of Russian businesses being under pressure to repatriate capital under Kremlin de-offshorisation drive . Most recently billionaire Alisher Usmanov completed the transfer of his Cyprus-registered USM Holding (owns controlling states in MegaFon mobile and Metalloinvest metals majors) to Russia. At the end of 2017 Cherkizovo was valued at circa $2bn and the 89.5% stake is controlled by the family of its founder Igor Babayev, after it bought a 21.05% stake for RUB12bn ($200mn) from the second-largest shareholder, leading Russian fund Prosperity Capital Management. The Babayevs reportedly planned an SPO in April to be followed up by an additional share issue that will be bought back by the family, but the plans appear to have been put on hold . Another 8% in the group is controlled by Cherkizovo's partner in Tambov Turkey venture, Spanish Grupo Fuertes. Cherkizovo is one of Russia's largest producers of meat products, with 10% and 5% market shares in poultry and pork segments, respectively, making it the second- and third-largest producer in those segments, according to company's estimates cited by Kommersant daily.
RusAgro reports a 8% fall in revenues but a 50% jump in EBITDA for 2018 on falling costs. Russian agricultural powerhouse RusAgro reported 2Q18 IFRS results that showed EBITDA margins rose across all divisions, with the overall figure at 23.1%, compared with 14.3% a year ago, as EBITDA reached RUB4.1bn, up 50% y/y, Sberbank reported on August 14. This came despite an 8% y/y decrease in consolidated revenues to RUB17.5bn. “That was driven mostly by a 24% drop in revenues at the sugar business (on the back of lower sales volumes and a decreased sugar price). However, thanks to lower sugar beet prices due to the 2017 harvest, the segment's EBITDA margin almost doubled y/y to 30%, and its EBITDA edged up from RUB1.2bn to RUB1.7bn,” Sberbank said in a note. The meat division's revenues fell due to lower meat prices. However, as with the sugar division, lower input prices (fodder prices were down amid low grain prices after the last harvest) lifted segment EBITDA, which rose 15% y/y. For the agricultural and oil and fats divisions, profitability at the EBITDA level crossed over into positive territory, though the margins were well below those seen in the sugar and meat segments. “During the conference call, the management guided for RUB24bn in capex in 2018, with RUB15bn going to the meat division. It is planning on a merger or acquisition in each of the businesses it operates (possibly as soon as this year),” Sberbank reports. The board has recommended a dividend of RUB1.0bn ($16.1mn) for 1H18, which implies a payout ratio of 44.3%. Excluding shares it owns, the company will pay out $0.60 per share, or $0.12 per GDR (for a yield of 1.2%). The record date is September 14 (the ex-dividend date is September 13) and the payment date September 28.
Russian agro giant RusAgro has completed the acquisition of KapitalAgro. The investment was RUB 1.8bn, with an additional RUB 300mn to be spent on modernising the asset. The target’s net debt is RUB 1.9bn. The deal increases Rusagro’s breeding capacity 12% to 230,000 tonnes of pork, while the additional slaughterhouse strengthens its vertical integration and market share in cuts. The announced amounts are on top of our estimate for RUB 23.5bn of organic capex in 2018F, with some 65% allocated to breeding capacity expansion in Tambov and the Russian Far East. The EV/EBITDA acquisition multiple was 5.0x, compared with Rusagro’s trading multiple of 7.0x. Rusagro is strengthening its focus on expansion via organic growth and M&As on appealing terms, and is one of the most aggressive growth stories in the Russian agriculture sector. VTB Capital (VTBC) reiterates its Buy recommendation and unchanged 12-month Target Price of $13.50.
Former shareholders of Russia's largest fishing company Norebo Holding are taking a shareholders conflict to the High London Court, according to Bloomberg's August 2 report. Reportedly €350mn worth of assets of Norebo's main owner Vitaly Orlov have been frozen. In January 2017 Orlov was
111 RUSSIA Country Report September 2018 www.intellinews.com