Page 121 - RusRPTMay20

Russian oil producer ​Tatneft​ has cut its output by around a fifth this month​, before a global supply deal takes effect in May, because storage capacity is full and European demand is weak, according to​ ​Reuters​. Under the new​ ​OPEC++ production cut deal that will reduce production of oil by 9.7mbpd on April 13​ Moscow has ordered companies to reduce production by a fifth from May 1. Mid-sized producer Tatneft has taken pre-emptive action and already cut production because, unlike other Russian producers, it has no access to Asian markets and mainly supplies Europe, where demand has collapsed. “We are reacting to the demand,” a company source told Reuters.
9.2.3​ Aviation corporate news
International rating agency Fitch Ratings has downgraded the long-term issuer default rating of Russian national flagship carrier Aeroflot to BB- from BB with a Negative outlook​, the agency said in a statement on April 17. “The downgrade reflects our updated macroeconomic and global aviation industry expectations and a weakening of Aeroflot's business and financial profiles over the next four years. With a deep global recession in 2020 in Fitch’s baseline forecast hitting air travel demand well beyond the ongoing restrictions related to the coronavirus pandemic, we now assume Aeroflot's revenue passenger kilometers to recover to its 2019 level only in 2023. This will leave profit margins and credit metrics weak for the previous rating level,” Fitch said.
9.2.4 ​Construction & Real estate corporate news
One of Russia's largest real estate developers​ ​Etalon​ posted revenue decline of 6% year-on-year to RUB44.7bn in 2H19 under IFRS​. For the full year of 2019 Etalon upped the top line by 17% y/y to RUB84.3bn, but it still missed the expectations by BCS Global Markets analysts by 7.7%. "Despite solid gross profit, FY EBITDA was 7% and 11% below BCS estimates, pre-PPA [Purchase Price Allocation] and post-PPA respectively, affected by other net expenses of RUB1.7bn, including RUB1.3bn impairment of parking slots," BCS GM commented, seeing the results as negative. As reported by bne IntelliNews,​ largest Russian real state players remain in focus as the market is expected to consolidate on the coronavirus (COVID-19) decline​. "PPA adjusted EBITDA/cash interest expense ratio of 1.7x implies potential 2019 dividends of RUB12 per GDR, but, with higher share of escrow accounts (thus, interest expenses growth), we see downside in 2020," BCS GM argues.
Russia’s biggest residential developer PIK Group sales are forecast to fall by 70% in April, ​according to CEO Sergei Gordeev in comments cited by Interfax on April 17. The company’s sales were down by 65% in the first 15 days of April versus March levels, hit by a partial lockdown in Russia amid the coronavirus outbreak, Gordeev said.
9.2.5​ Retail corporate news
X5 Retail Group​ CEO Igor Shekhterman has given an interview, highlighting the current operating conditions ​and the company’s strategic adjustments. The preparatory works for the lockdowns took place from February and his comments about customers stocking up on long-lasting items mean we see certain pressure on traffic in the coming months. Plans to cut
121​ RUSSIA Country Report​ May 2020 ​ ​www.intellinews.com