AFK Sistema revenue down 0.6% to 167.4 bln rubles in Q2, OIBDA up 8.1%
MOSCOW. Aug 30 (Interfax) - AFK Sistema's consolidated revenue to International Financial Reporting Standards (IFRS) was 167.4 billion rubles in Q2 2017, down 0.6% year-on-year, the corporation said in a statement.
Adjusted operating income before depreciation and amortization (OIBDA) rose 8.1% to 48.6 billion rubles on the back of strong performance by MTS with OIBDA rising 8.2% to 44 billion rubles due to increased revenue and improved efficiency in the retail business; a revaluation of biological assets (grain crops, vegetables and fruit from the upcoming harvest, and livestock) at Agroholding Steppe; and lower provision charges at MTS Bank. OIBDA margin stood at 29%, up from 26.7% in Q2 2016.
Adjusted net loss widened to 799 million rubles from 103 million rubles last year mainly reflecting non-cash foreign exchange losses at the Corporate Centre and Segezha Group, due to the revaluation of liabilities denominated in foreign currencies. These losses were partially offset by the improvement of the bottom line at MTS and turnarounds at Medsi and MTS Bank, the report said.
AFK Sistema's revenue was higher than predicted in Interfax's consensus forecast where analysts had predicted a 1.3% drop to 166.25 billion rubles. OIBDA also exceeded analysts' expectations, forecast at 46.8 billion rubles with margin at 28%.
Selling, general and administrative expenses (SG&A) were essentially flat, falling just 0.2% year-on-year to 38 billion rubles. SG&A at the Corporate Centre declined 25% year-on-year in Q2 to 1.5 billion rubles. Depreciation and amortization expenses increased 1.2% year-on-year to 24.2 billion rubles.
Net debt at the Corporate Centre level was 84.2 billion rubles as of 30 June, 2017.
At the end of June, cash position at the Corporate Centre level was 36.2 billion rubles.
Results for subsidiaries in Q2 2017
In Q2 four out of 12 consolidated AFK subsidiaries demonstrated a decline in revenue: RTI, SSTL, MTS Bank and the real estate segment (Leader Invest, Business-Nedvizhimost and Mosdachtrest.
All subsidiaries with the exception of SSTL demonstrated positive OIBDA. SSTL made an OIBDA loss of 1.397 billion rubles compared to a 444 million rubles loss last year.
Segezha Group boosted revenue 7.6% to 10.795 billion rubles as a result of a 19.3% increase in sales of sawn timber and a 23.1% rise in sack paper sales, as well as higher forex-denominated sales prices for sawn timber and paper.
Adjusted OIBDA decreased 32.8% year-on-year, primarily as a consequence of the strengthening of the ruble against the euro and the dollar, combined with higher logistics and raw materials costs.
RTI's revenue declined 22.7% to 8.8 billion rubles due to greater seasonality in the Defense Solutions business unit and rescheduling of revenue recognition for a number of projects to the last quarter of 2017.
OIBDA was down almost 32-fold - from 856 million rubles to 27 million rubles due to lower revenues at Defense Solutions, as well as a loss on impairments of inventory in the Microelectronics business unit.
Medsi's revenue increased 19.6% year-on-year in Q2 to 2.758 billion rubles, driven by a 6.3% increase in the number of visits and a 12.4% increase in the average check. OIBDA rose three-fold to 398 million rubles.
Bashkirian Power Grid Company (BPGC) boosted revenue 13.5%, in particular on the back of a 4% increase in the productive supply of electricity. OIBDA increased 12.3% to 1.24 billion rubles.
Sistema Shyam TeleServices Ltd. (SSTL) results in Q2 reflect the company's decision to freeze client acquisition and marketing campaigns, as Sistema and Reliance Communications Ltd ("RCom") continue to work towards the merger of SSTL's telecommunications business with RCom. Revenue declined almost three-fold to 1.176 billion rubles.
The real estate segment saw revenue decline 5.9% to 2.8 billion rubles and OIBDA fell 45.4% to 777 million rubles.
Binnopharm increase revenue 22.6% to 620 million rubles; OIBDA was up 80% to 145 million rubles.
The revenue of hospitality assets increased 73.4% to 1 billion rubles. This was in large part due to an increase in the number of hotel rooms as a result of Sistema Hotel Management's acquisition of Regional Hotel Chain (RHC) in the Q4 2016 and the opening of the Emerald Forest eco-hotel in November 2016.