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bne Invest
May 17, 2019 www.intellinews.com I Page 12
Russian aluminium major Rusal posts weak 1Q19, post-sanction recovery expected
One of world's largest aluminium producers Rusal reported 8% quarter-on-quarter decline in IFRS revenues in the first quarter of 2019 to $2.2bn on lower sales and prices (down by 7% and 8% q/q, respectively).
Weak results of Rusal were largely anticipated and are expected to rebound as the company continues to recover from lifting of the US sanctions.
Rusal's Ebitda was down 38% q/q to $226mn, which was in line with consensus expectations of analysts. At the same time, anticipated share in profits of Norilsk Nickel metals major had Rusal's net income climb 83$ q/q to $273mn in 1Q19.
The shares of German wholesale group Metro dropped last week on May 9 as the company reported another quarter of falling sales in Russia, Reuters reported.
Like-for-like sales declined by 4% in Russia in the second quarter, "as steps the company has taken to revive the business such as price cuts took effect more slowly than expected," Metro said as cited by Reuters.
Chief Executive Olaf Koch told the press he
still sees improvements coming in the Russian business but declined to say when he expected it to return to growth, noting sluggish consumer sentiment in the country.
poor trading results for the period," BCS Global Markets commented on May 14.
The analysts see 1Q19 report as neutral: recovery will be seen in 2Q19, which BCS GM anticipates to become a positive catalyst for Rusal's
shares. "The stock remains highly attractive
(4.4x M2M P/E), even despite recent weakness of the aluminium prices," BCS analysts note, maintaining a Buy recommendation.
In February 2019, the US Treasury Department Office of Foreign Assets Control (OFAC) removed the company and other assets of Russian billionaire and Kremlin insider Oleg Deripaska from the US Specially Designated Nationals And Blocked Persons List (SDN List).
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German Metro takes a hit on falling Russian sales
"UC Rusal’s 1Q19 financial performance came in weak as expected after the company released
Metro previously reported a decline in fourth quar- ter sales by 2.3% to $10.3bn, with the fall attrib- uted to lower sales in its Russian business and the hypermarket format Real it is trying to sell. The Cash & Carry business in Russia was estimated at €4bn-7.5bn in 2014 when Metro had to call off its €1bn IPO, and has been in decline since.
Together with French hypermarket major Auchan, this follows a general trend of local retailers catching up and pushing out foreign competitors, such as recent acquisition of German MediaMakrt by electronics retailer M.Video as part of a mega- merger with rival Eldorado in March 2018 to form the biggest consumer electronics retail chain in Russia, and a top ten European player.