Page 190 - RusRPTSept21

Segezha Group, 1H21 IFRS conference call highlights; everything points toward growth acceleration
The numbers are speaking for themselves. With this bullish sentiment, Segezha's CEO Mikhail Shamolin started a 1.5h conference call dedicated to the company's strong 1H21 IFRS release. Below are the highlights of the call.
On pricing projections:
Prices across the whole product portfolio have been rising, driven by increased demand (post-pandemic recovery and the development of the ecommerce and DIY markets) and the fact supply has been limited by the global wood shortage.
Segezha is almost fully committed for 3Q21, and pricing has improved both y/y and q/q.
However, in 4Q21, the company expects some seasonal softening in the sawn timber and glulam segments (closer to the 2Q21 levels). Prices in 2022 are going to be on 4Q21 levels, Segezha expects.
On Segezha West (a milestone project that is to earn RUB50bn in EBITDA once fully operational post 2025):
Designed capacity is 1.5mnt of pulp, 2/3 of which is to be premium bleached pulp. This would fully cover Segezha's own needs (Segezha has not had its own bleached pulp production, so it has had to purchase it from third parties). Half is to be converted into paper; half is to be sold.
Total capex for the project is around RUB150bn. Segezha plans to invest RUB20bn, with another RUB20bn coming from largest Russian banks, and the remainder funded through project financing.
Segezha is to consolidate Segezha West after commissioning (scheduled for late 2024 - early 2025, in line with our model).
The final decision on the project is to be announced in late 2021 - early 2022.
On dividends:
The company is to pay RUB5.5bn (the upper bound of the range, according to dividend policy) by the end of 2021, providing a 4.4% DY, in line with our expectations.
Starting from 2022 Segezha is to pay dividend on semi-annual basis.
On debt:
Segezha's ND/EBITDA has declined to 1.2x. It is deleveraging more expensive collateralised debt, which would decrease its average
190 RUSSIA Country Report September 2021 www.intellinews.com