Page 109 - RusRPTDec19

over 4,300 retail points in 9 countries as of end of 2018 with revenues of $39bn and net profit of about $3bn. Familia is Russia's largest off-price retailer founded in 2000 and operating 273 stores in 46 Russian regions with an assortment of over 7,000 brands. In 2018 the company made revenues of RUB22.7bn and net profit of RUB2.7bn. The company is one of the faStest-growing apparel retailers in Russia, tenth in terms of turnover and fifth in terms of selling space. Luxembourg-based Famila Trading S.a.r.l, is owned by Lavos S.a.r.l (30,3%), Paragem Assets S.a.r.l (20,2%), ELQ Investments III Ltd (25%) и Veliada Ltd (24,5%), according to RBC. The beneficiaries of Lavos and Paregem are businessmen Dmitry Lukovnikov and German Oshkordin. In 2016 Goldman Sachs (25%) and Baring Vostok (24.5%) bought into the retailer. The new proportion of shares after the TJX deal is not disclosed, but all the shareholders will remain in the capital of Familia.
Russian shoemaker and retailer ​Obuv Rossii​ plans to start a transition from footwear and apparel retailer to being a multi-format, multi-brand offline marketplace​, RBC business portal reported on November 26. Reportedly, the company will start selling new categories of merchandise in its stores, including cosmetics, kitchen appliances, other household appliances and consumer electronics, charging a 30% commission on third-party sales booked as own revenue. At the same time the bank sees "the logic of Obuv Rossii's move," as the company's traffic is very seasonal, and offers spare capacity at stores to sell other types of merchandise to generate extra profit during typically slower periods. Should the project require little investment, it could deliver positive results, Sberbank believes and welcomes the initiative.
9.2.6​ Agriculture corporate news
RusAgro​ has released weak 3Q19 financial results, thus kicking off the new farming season​. The numbers fell short of analyst’s modest estimates (a 6% miss on EBITDA). Revenues surged 74% y/y to RUB34bn on new organic and acquired volumes across key segments. EBITDA remained flat y/y at RUB4.4bn on a 10pp y/y correction in EBITDA margin to 13%. The latter was mainly due to a 13% q/q decline in sugar prices and sugar EBITDA margin (2% in 3Q19), as well as margin-dilutive oil & fats sales (46% of total vs. 24% a year ago). We forecast the sugar market to be notably oversupplied in the next twelve months and do not see recovery in Rusagro’s results. VTBC unchanged 12-month Target Price of $12 implies an ETR of 15% and a Hold recommendation. Consolidated EBITDA was flat y/y at RUB4.4bn and came 6% short of our estimates. Profitability lost 10pp y/y to 13% due to weak margins in sugar (2% vs. 19% a year ago) and meat (24% vs. 39%); the product mix also deteriorated, with a growing share of the low-margin crushing business and yet to be fully consolidated results of SolPro acquisition. In 9mo19, capex was RUB20.7bn vs. RUB14.4bn last year. The company is at the peak of organic capex allocation, while a further RUB8.5bn was spent for 22.5% in Russia’s third-largest pork breeder Agro-Belogorye. We anticipate more details on the latter’s financial stance in the full disclosure and during the conference call. Net debt went up RUB6bn to RUB50bn as of September, while leverage was 2.6x net debt/LTM EBITDA. The recent acquisitions created downside risks to management’s deleveraging target for 2019 (by some RUB10bn) while our model stays at RUB47bn net debt by YE19. The sugar market outlook is weak, as we forecast domestic production at 7mnt vs. consumption of 6mnt. The new season sees October-November blended price of RUB18/kg, implying 45% y/y correction and vague recovery prospects. Our
109​ RUSSIA Country Report​ December 2019 ​ ​www.intellinews.com