Segezha to open office in China for expansion in Asia-Pacific region
MOSCOW. Sept 21 (Interfax) - Segezha Group plans to open an official representative office in China to strengthen its position on the markets of countries in the Asia-Pacific region.
The Russian forestry group said that on Monday its board of directors considered setting up a subsidiary.
"We're considering setting up an official representative office of Segezha Group in China as part of the implementation of the strategy to 'pivot to the East' and strengthen our presence on the Chinese market and the markets of countries in the Asia-Pacific region as a whole," the company told Interfax.
Segezha's board also discussed recommendations to subsidiaries on dividend payments to the parent company. Segezha itself does not plan to pay dividends this year, but remains committed to its approved dividend policy, which calls for paying out 3 billion to 5.5 billion rubles annually until 2023, inclusive, and 75% of free cash flow from 2024 through 2026, company management said earlier.
China is Segezha's main export market, and 70% of the group's revenue is generated by exported. The group's exports to China totalled 11.5 billion rubles or about 12% of revenue in 2021; the second biggest export market, Egypt, was far behind with 6.5 billion rubles. Exports to China are even higher this year given the ban on Russian exports of forest products to Europe imposed on July 10.
"That which we shipped and sold to Europe we can no longer ship and sell. Accordingly, everything that went to went to Europe, and this was primarily plywood and lumber from the northwest region, is now going to the East - China, India, Southeast Asia, the Middle East, Africa and so on," the company's vice president for finance and investment, Rovshan Aliyev said in late August.
Considering the growth of exports to China, Segezha is prepared to considering placing yuan-denominated bonds, a source at the company told Interfax recently. "We're considering. The yuan is complimentary for us given the substantial amount of sales in China," the source said.