Veles Capital - RusHydro: IFRS 2017 FY report and conference call. NEGATIVE - Mar 26, 2018

RusHydro

IFRS 2017 FY report and conference call. NEGATIVE.

RusHydro presented its IFRS report for 12 months of 2017 and hosted a conference call. NEGATIVE.

Comparing the respective estimates (in other words, the estimates corrected by retirement of ESKB in December of 2016), we observed the sales without funding up by 1.2% YoY, operation spending up by 5.6%, EBITDA up by 3.7% (according to the company’s data). The net profit reduced 41.3% to RUB 22.5 bn. The output by company reached its all-time high level at 140,249 mn kWh.

As for the positive matters, we indicated the fact that the debt load declined and “net debt/EBITDA” reached the level of 1.1x (previously – at 1.3x). Moreover, recovery of the flooded Zagorskaya PSPP-2 was delated for an uncertain term, yet the facility has not been devaluated.

Speaking of the negative issues, we outline the company having admitted the loss from depreciation of the principal assets and debt arrearage worth sum approximately RUB 30 bn. In addition, the forward with VTB starts affecting the company’s profit estimates seriously having built up the financial spending by RUB 14 bn in 2017 – given made a negative impact on the net profit for the period.

The principal headline we got in course of the conference call was the lack of any 2017 dividends’ decision and that the company’s cash flow will be considered when setting their volume. The decision will be coordinated with the government and the approach to the payment will be announced in May of 2018.

We assume the company reported weak and the uncertainty regarding the dividends forms a negative factor.

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