Globaltrans: H1 2018 dividend possible with current leverage, FCF
MOSCOW. March 26 (Interfax) - Globaltrans Group is allowing for the possibility of paying dividends for H1 2018, provided that current investment activity is maintained and free cash flow is stable amid market growth.
"It is too early at this point to provide any estimates regarding H1. But the year has begun relatively well: In January-February, freight turnover in the network grew 5%. Globaltrans is also doing well. So I'll answer as follows: we have a dividend policy, we are planning to pay no less than 50% of free cash flow if leverage is less than 1x [net debt to adjusted EBITDA]," the company's CFO Alexander Shenets said on a conference call on Monday.
"If our leverage is substantially below 1x, for example, the 0.4x that we had at the end of the year, we can recommend that the board pay special dividends to readjust the capital structure. And in principle, as we said before, we will test the capital structure once every half year and make the relevant decisions," he said.
Around 3 billion rubles were spent in 2017 on maintenance of Globaltrans rolling stock, with 2018 expenses expected at 3.5 billion rubles amid inflationary pressure. Furthermore, 3 billion-4 billion rubles will be spent on the acquisition of up to 1,500 rail cars of different types.
The group's free cash flow in 2017 grew 92% to 17 billion rubles, with cash flow attributable to shareholders up 2.14-fold to 15.5 billion rubles due to a strong increase in cash generated from operations. In 2017, net debt/adjusted EBITDA fell from 0.7x to 0.4x. Net debt was down 1% to 11.4 billion rubles. 100% of debt was denominated in rubles, the company's functional currency.
Globaltrans specializes in shipping metallurgical freight, oil products, construction freight and coal. Company founders Konstantin Nikolayev, Nikita Mishin and Andrei Filatov each own 11.5% of shares, and Alexander Yeliseyev holds 6.3% of shares. The free float is 59%, including 5% of shares held by the BlackRock investment fund and 4.5% of shares put in a blind trust by Sergei Maltsev, who is currently an advisor to the RZD president.