MOSCOW: Sistema PJSFC, a publicly-traded diversified Russian holding company, has announced a net profit of RUB 391 million for the quarter ended December 31, 2018 as Group’s revenue increased 15.5 percent to RUB 225.1 billion.
Andrey Dubovskov, President and Chief Executive Officer of Sistema, said: “Sistema delivered impressive financial and operating results in 2018. Group’s revenue for the year increased by 12% to RUB 777 billion on the back of robust growth of our key assets. Most assets grew at significantly above the average growth rates of the markets in which they operate. Notably, MTS, Detsky Mir, Segezha Group, Agroholding Steppe and Medsi strengthened their leadership positions in their respective industries.
“MTS is not only increasing revenue from mobile services and smart phone sales, but is also entering new, adjacent high-growth markets including IT outsourcing, Internet of Things, cloud services, e-sports and web-based event ticket sales. Detsky Mir continues to grow its business in Russia and Kazakhstan, and has expanded to Belarus and launched a pet supplies business – all while increasing profitability. Segezha Group continues to expand its product lines, focusing on demand from high-opportunity export markets.
Agroholding Steppe is now a top-6 Russian grain exporter and continues to demonstrate strong growth across all its main business segments. Steppe also launched its own retail brand as it aims to grow closer to consumers. Based on FY 2018 performance, Medsi has established itself as the leading private healthcare business in Russia by revenue and one of the fastest-growing healthcare businesses globally.
“Group adjusted OIBDA increased by 34% thanks to double-digit OIBDA growth at all key portfolio companies. The new IFRS accounting standards had a significant impact on the results of MTS and Detsky Mir, though on a like-for-like basis these companies also delivered strong OIBDA growth.
“In late 2018 and early 2019 we completed a number of strategic transactions, demonstrating that we continue to add value to our assets in an environment where we have limited investment resources. As part of a consortium of investors we acquired a leading Russian pharmaceutical company, OBL Pharm, and plan to merge it with our pharmaceutical holding, Binnopharm, significantly increasing the value of that business. In future we plan to bring the combined company to the public markets. As a result of transactions involving Leader Invest and Etalon Group, we have changed the landscape of the Russian residential property market, establishing a company that is a top-3 developer in the Moscow and St Petersburg markets by construction volumes and sales. Additionally, we continued to increase our exposure to Ozon, the leading multi-category online retailer. This transaction represents Sistema’s strategic investment in the fast-growing e-commerce industry through a company that is poised to consolidate this highly fragmented market.
“We have somewhat modified the Group strategy adopted last year to reflect current market conditions, though our key objectives remain unchanged: maximise shareholder value and reduce the discount between market capitalisation and net asset value, attract third-party capital to diversify and expand our investment resources, and reduce gross debt to RUB 140-150 billion. In the coming years our focus will be on growing the value of four portfolio companies – Agroholding Steppe, Segezha Group, Medsi and Ozon. We are targeting valuations of USD 1-2 billion for each of these companies. We view these companies – which we will ultimately contemplate to bring to capital markets – as catalysts to enhance Sistema’s valuation and the key to reducing the discount.
“Given the need to strike a balance between decreasing debt, continuing to invest and delivering returns to shareholders, the Board of Directors has recommended that the General Meeting of Shareholders approve dividends for the full year 2018 in the amount of RUB 1.1 billion, or RUB 0.11 per share. As we previously stated, after the debt load has been substantially reduced, the Company will return to the question of dividend payments, with the aim of strengthening our investment case.”[the_ad id=”31605”]