Page 129 - RusRPTMay19

ca. 40% y/y with FCFE yield around 2% for 1Q19. Asbne IntelliNews reported the company is having a slow start to the year. The company missed expectations for the fourth quarter by 4% with profits down to $114mn, while it reported revenues of RUB61.4bn ($921mn), down by 14% q/q. The company's Ebitda was down 33% q/q to RUB26.9bn, which was 2% below the consensus expectations of analysts at that time too. Analysts were disappointed with the sales in January too, which were also down on previous years, as the chart below shows, but were keenly awaiting the March numbers, which have also turned out to be a disappointment. “We think focus remains on March sales, which historically (2015-2017) showed 1.5x seasonal pick-up compared with average level for January-February, and hence absence or presence of this pick-up might be an indicator of rough diamond market conditions,” Dmitry Glushakov with VTBC said in a note in February. Alrosa’s shares have significantly underperformed the RTS index this year as a result of the slow sales, with the shares down 10% YTD, against a gain of 18% for the index as a whole as of April 11 over the same period.
Norilsk Nickel has reported a 1Q19 trading update that analysts view as strong: copper and PGMs production enjoyed double-digit growth, outperforming our expectations. The company, however, indicated several contributing factors that might be one-offs, and confirmed its 2019 guidance. As such, production growth might normalise in the near future, in our view. Nevertheless, we believe that the trading update could be supportive of earnings and free cash flow generation in 1H19. BCS unchanged 12-month Target Price of $25.70/GDR implies a 27% ETR; Buy reiterated. Nickel output growth in line with guidance; copper outperforms. Nickel production from the company’s own feed added 3% y/y in 1Q19 on higher processing from Kola MMC. Meanwhile, copper output added 13%, mostly on Chita ramp-up and accelerated processing of Rostec concentrate.
9.2.12 Transport corporate news
Net IFRS profit of Russian Railways (RZD) dropped four-fold year-on-year in 2018 from RUB139.7bn to RUB35.4bn ($529mn), Vedomosti daily reported citing a briefing by deputy head of the company Vadim Mikhailov. The revenues of Russia’s railroad monopoly increased by 7.2% to RUB2.41 trillion, while its Ebitda inched up by 6.4% year-on-year to RUB527bn. The drop in net profit was attributed to higher fuel costs, indexing salaries of the workers, and non-cash losses on asset revaluation. Revenues in 2018 increased mostly on higher income from cargo transportation and fees on access to infrastructure. RZD’s long-term development programme previously estimated net profit at RUB34.8bn, Ebitda at RUB452bn, and revenues at RUB2.37 trillion, which the company narrowly outperformed. Net profit by 2025 is seen rising to RUB186bn, with revenues up to RUB3.51 trillion. Investment in 2018 increased from RUB529bn to RUB617bn, mostly linked to renewing the train fleet and infrastructure security measures. Total investment planned in 2019-2025 in railroad projects stands at RUB8.66 trillion, out of which RUB4.67 trillion would be RZD’s own funds. Despite expected cost and operating efficiency improvements under the company's new president Oleg Belozerov, earlier reports warned that RZD might still need to rely on government support.
One of Russia’s largest railway operators Globaltrans reported revenue growth of 15% year-on-year to RUB30.8bn in 2H18, in line with analyst expectations. Company's Ebitda was up 21% y/y to RUB16.6bn, 5% above the estimates of Sberbank CIB, though marking a slowdown from the 37% y/y
129 RUSSIA Country Report May 2019 www.intellinews.com