Page 107 - RusRPTDec19

9.2.3​ Aviation corporate news
Aeroflot disclosed operating results for October on November 20 for both the group and its flagship airline​. Group passengers were up 8.5% y/y in October, underperforming the overall market (up 11%, according to the Federal Agency for Air Transport). The breakdown showed that international routes performed better than domestic. The trend of much slower growth in the flagship airline's passengers versus the rest of the group continued - Aeroflot saw 0.9% more passengers y/y, versus 14% growth for Rossiya and 36% for Pobeda. This has been driven by a lack of fleet additions for Aeroflot. Load factor for the whole group was almost flat y/y in October, but for the flagship airline it declined again (by 1.2 pp).
9.2.4 ​Construction & Real estate corporate news
9.2.5​ Retail corporate news
LSR Group​ (LSR) is to acquire aerated concrete plan for RUB 1.1bn, but unlikely to influence sales structure or dividends. ​LSR has announced that it is to acquire a 450,000cbm-capacity aerated concrete plant from H+H for RUB 1.1bn. With this deal, the capacity of LSR’s aerated concrete division increases 30% to 1,935,000cbm, and strengthens the company’s position as a regional leader in the segment. Having disposed of a series of production assets, the building material segment’s contribution to revenues declined to 12% in 2018, from 32% five years ago.
Russian ​Detsky Mir​ children’s goods retailer posted net profit decline of 9.4% year-on-year in 3Q19 under IFRS, narrowly missing the analysts expectations ​on back of higher interest expenses due to 25% y/y growth in debt. As reported by bne IntelliNews, previously in 1Q19 and 2Q19 the ​retailer maintained stable revenue growth on a bad market​, offering not just one of the highest sales growth rates in the retail sector, but also an estimated 11% dividend yield. The company’s revenues gained 19.3% y/y due to 11.2% y/y growth in selling space and 10.7% increase in like-for-like sales in Russian and Kazakhstan. Nevertheless, with Ebitda growth of 9% y/y Detsky Mir’s Ebitda margins declined from 20.5% to 18.4% in the reporting quarter. “Continued price investments lead to an increase top-line, but negatively affected margins, which, however, should be offset by the recently announced 9M19 dividend per share and the CEO’s expectations of 15% y/y growth in dividends for 2019,” BCS Global Markets commented on November 8. The retailer also managed to cut payroll and marketing costs and bring the total share of cost of goods sold in the revenue to 12.7%. The company maintained an aggressive expansion guidance, increasing the planned store openings for 2019 to 100 from previously planned 90, while possibly increasing the dividend payment by 15% in 2019. Detsky Mir is controlled by the AFK Sistema multi-industry investment conglomerate which has been seeking to SPO or sell the asset. The latest reports suggested that the ​retailer could be sold​ to the Safmar Group of Mikhail Gutseriev or to Sovcombank.
During a conference call,​ ​Detsky Mir​ management mentioned its plans for more than 300 new openings in 2019-22​, implying marginal upside risks to
107​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com