Page 181 - RusRPTSept21

· Pig iron and steel making dynamics in 2Q21 turned positive, while using the stock accumulated in the previous quarter ensured a major boost to sales of nearly every type of the steel division’s products
· Iron ore sales improved – up 27% q/q (down 12% y/y) to 414kt, due to increased stripping and mining works. Launches of new mining and transport equipment had a positive effect as well
· 2Q21 crude steel production rose by 3% q/q, but fell 5% y/y to 876kt
· Steel product sales grew by 21% q/q and 8% y/y to 975kt. Flat steel sales went up 15% q/q since repairs at the Chelyabinsk Metallurgical Plant were completed, while long steel sales increased by 22% q/q
· Ferrosilicon sales also grew 17% q/q and y/y, standing at 21kt, as the company increased shipments to Europe.
● Fertilisers
Phosagro published 2Q21 strong results. Revenues of RUB89bn: up 48% y/y; in line with us and consensus. EBITDA of RUB39bn: up 91% y/y; in line with us and slightly above consensus. Adjusted net income of RUB24.1bn: up 3.5x y/y; 4% above consensus and 9% above us. FCF of RUB19bn: up 9.4x y/y; in line with consensus and slightly below us. BoD has recommended a dividend of RUB156/share, or 106% of FCF (a 3.7% interim DY). This came slightly above our expectations of RUB125-145/share. Overall, strong numbers (despite the operational decline) and solid, higher than expected dividends are likely to be perceived positively by the market, we believe. Conference call today at 16.00, UK time.
Russian phosphate fertiliser major Phosagro plans to launch a pilot carbon farm by 2025, according to Interfax citing the company's CEO, Andrey Guryev. As reported by bne IntelliNews, Russian state and corporate policy is focusing increasingly on ESG as Russia belatedly prepares to tackle the EU carbon tax introduction and other "green" challenges. The new forest-field will be set up near Phosagro’s Cherepovets complex to deposit carbon, with an estimated capacity of about 0.7mn tonnes per year (tpy) of CO2. This is equivalent to emissions from the production of fertilisers supplied by Phosagro to the EU market, or equivalent about 15% of Phosagro’s direct CO2 emissions in 2020. Phosagro intends to conduct the pilot project by 2025, and fully launch the farm by 2028 if the pilot project succeeds, Guryev said, while adding that the company also anticipates the project being scalable and it may further create/sell a franchise for the creation of such farms.
● Other
181 RUSSIA Country Report September 2021 www.intellinews.com