Page 175 - RusRPTJan23

to EBITDA performance).
• _Net debt at HQ grew 10% y/y to Rb230bn mostly due to investments.
Komatsu Ltd, the world's second-largest construction machinery maker after Caterpillar Inc, has no immediate plan to withdraw from its Russian operations, it said on December 5, but did not rule out exiting the country in the future, Reuters reported. Following Russia's (military operation in) Ukraine in February, Komatsu, which also competes with Sany Heavy Industry and Hitachi Construction Machinery Co Ltd, halted shipments to Russia as well as local production but still offers maintenance services for its machinery already in the country. Komatsu has a manufacturing plant in Yaroslavl, Russia.
Russia and other countries in the Commonwealth of Independent States (CIS) accounted for 7% of Komatsu's heavy machinery sales in the year to end-March 2022. Komatsu in October posted a 75% jump in net profit for the first half of the current business year thanks to strong heavy machinery demand and a softer yen, and raised its full-year net profit forecast by 32% to a record 298bn yen, or $2.21bn.
Segezha published its 3Q22 IFRS results on Friday, that were unexpectedly weak, but still came out worse than analyst’s estimates. Revenues were down 6% y/y to RUB24bn, EBITDA declined 70% y/y, as production costs jumped by 58%. The company said that logistics expenses surged to RUB6.9bn over 9M22.
• Results feature different trends in different divisions: paper and packaging segment was doing fine in 3Q22, while forestry was no longer a growth driver, but rather a drag.
• Consolidated earnings were down: EBITDA down by 70%, while bottom line turned red, as the company posted a net loss of cRb3bn in 3Q22 on adjusted basis.
• Company cited a significant rise in logistics expenses. Transportation cost for delivery of wood materials from Irkutsk to China went up to $70/cbm vs $20/cbm, from North-West of Russia to China – to $120/cbm vs $50/cbm (as per Interfax).
• Meanwhile, the management now sees gradual improvements, such as declining transportation costs, that should return the company to margin recovery.
Weak results, M&A approach questioned. Segmental information reveals that OIBDA of historical core part of Segezha (paper and packaging) was actually up 25% y/y in 3Q22. While in forestry (where the main acquisitions have been made) earnings have evaporated (down 98%). This questions the whole M&A approach of the company, as value was transferred to assets in the segment that currently generates no earnings. Results presentation contains important highlights that Segezha boosted its local Russian sales. Focus on local market
175 RUSSIA Country Report January 2023 www.intellinews.com