Page 123 - RUSRptSept18

President Vladimir Putin, he and Timchenko are included in the US SDN sanctions List. The company could reportedly offer existing Sibur shares in Moscow and London by the end of the year. JP Morgan and Gazprombank are the organisers, but the IPO is likely to attract other runners due to the ambitious amount of the deal. Sibur is a major international player and participates in state-led business negotiations. It is one of Russia’s most profitable large companies with earnings before interest, tax, depreciation and amortisation of $2.8bn in 2017 on an Ebitda margin of 35%, according to the Financial Times. The company operates 26 facilities across Russia and employs around 28,000 people. In 2017 it started exporting liquefied petroleum gas supplies to China, in addition to existing rubber joint ventures with China Petroleum & Chemical Corp (Sinopec). Sinopec and Silk Road Fund bought 10% each in the Russian company. Saudi Arabian Oil Co (Saudi Aramco) is reportedly also in talks with Sibur eyeing a joint venture that would produce synthetic rubber in the Gulf kingdom. The name of the company surfaced in the infamous 2017 Paradise Papers investigation, in connection with the US shipping company Navigator allegedly linked to US Secretary of Commerce Wilbur Ross that operated a lucrative partnership with Sibur.
Russian machinery and engineering major Power Machines (Silovii Machini) of metals tycoons Alexei Mordashov will receive RUB3bn ($44mn) from the state in 2010 on development of gas turbines of high capacity of 65MW-170MW for domestic electricity generation facilities. The company works in 35%/65% joint venture with German engineering giant Siemens, which controls 80% of the gas turbine market for Russian power stations. Power Machines is sanctioned since 2018 for being embroiled in supplying four Siemens gas turbines to the annexed Crimea peninsula . Previously, Mordashov recalled events in Crimea and tried to challenge Siemens' role in Russia by asking for state support to launch the production of industrial-scale gas turbines at Power Machines without Siemens' help. Most recently Mordashov was said to raise another RUB30bn ($0.44bn) by issuing 21.3bn additional shares in favour of main shareholder Severgroup, which also controls steel major Severstal. Industry analysts surveyed by Vedomosti suggested that Mordashov is now raising capital to try to get a slice of the turbine business, which will be boosted by the upcoming state-financed generation capacity modernisation drive of RUB1.35 trillion ($213bn) by 2035. Power Machines was sanctioned by the US in January and has been operating in red since 2015, posting a loss of $167.5mn in 2017. Power Machines reportedly pledged to invest up to 50% of the costs of domestic development of gas turbines, asking the government to co-finance the investment and grant preferential access to the domestic market. In the meantime, despite the Crimea embarrassment, Siemens has reiterated its readiness to participate in the modernisation programme and even localise 90% of the production of the turbines , as required by Kremlin. Analysts doubted Mordashov’s ability to deliver without access to Siemens expertise and engineering patents. Power Machines is unlikely to have a head start in the development of the complex technology that could take up to 10 years to develop, an unnamed source in large industrial machinery manufacturer told Vedomosti in April. Previously Power Machines developed a trial version of a 65MW turbine that was installed at the generation facility of Mosenergo utility major in 2011, only to see it taken out again in 2012 and replaced with a turbine developed by Italy’s Ansaldo. Another gas turbine prototype developed domestically by consortium of state majors RosNano and InterRao reportedly failed in trials in 2017.
Russian phosphate major Phosagro reported 4% quarter-on-quarter revenues growth in the second quarter of 2018 to RUB56.6bn , with 7% q/q sales decline offset by ruble depreciation and higher fertiliser prices. In the first quarter Phosagro missed expectations, but in the second company's Ebitda jumped 31% q/q to RUB18.7bn beating consensus expectations by 7%, with the margin gaining 7pp q/q to 33%. Net profit of the company was 62% above consensus expectations at RUB3bn. Aton Equity attributed the surge in Ebita to a shift in the product mix to high-margin fertilisers and a reduction in
123 RUSSIA Country Report September 2018 www.intellinews.com