Earnings Report /
Russia

Globaltrans: 2H21 IFRS results beat expectations – final dividends on hold; Mixed

  • Globaltrans (GLTR LI; U/R) issued its 2H21 IFRS strong results, which came above expectations

  • From a balance sheet perspective, the company managed to reduce its 2H21 leverage by RUB 1 bn to RUB 31.3 bn

  • The final dividends payout was temporarily suspended due to technical limitations

Boris Krasnozhenov
Boris Krasnozhenov

Head of Research (Managing Director)

Radmir Fattakhov
Radmir Fattakhov

Analyst, Metals & Mining

Alfa
28 March 2022
Published by

Globaltrans (GLTR LI; U/R) issued its 2H21 IFRS strong results, which came above expectations. Adj. revenue amounted to RUB33.7 bn, up 29% y/y (up 19% vs. Alfa Bank consensus) on the back of ongoing gondola rate recoveries coupled with robust pricing in the tank car segment and flattish freight rail turnover dynamics. Adj. EBITDA came 41% above our estimates, amounting to RUB 18.7 bn (up 54% y/y), which translates into a 55% EBITDA margin (9 pp y/y increase). The solid results were also supported by stringent cost management, which transformed into 3% y/y total operating cash cost growth.

From a balance sheet perspective, the company managed to reduce its 2H21 leverage by RUB 1 bn to RUB 31.3 bn, with net debt to adj. EBITDA easing to 0.6x (1.2x in 1H21). Attributable FCF increased by 47% on a y/y basis amounting to RUB10.7 bn (up 73% vs. Alfa Bank) supported by RUB 1.1 bn of cash inflows from the sale of 60% in SyntezRail coupled with lower capex (RUB 4.5 bn, down 3% y/y).

The final dividends payout was temporarily suspended due to technical limitations related to cash upstreaming to the Cyprus holding company and concerns linked to the objective of establishing liquidity buffers. Previously, management announced a final 2021 dividend payment guidance of RUB 5.0 bn (~RUB 28/GDR). The Board of Directors recommended a new buyback program (for up to 10% of the share capital, including GDRs already held by the company) for the next 12-month period from the date of the AGM. The final decision is subject to the AGM, which will take place on 26 April.

All in all, we view the results as mixed for the stock. In our view, the stock will be under pressure in the next 3-6 months due to possible logistic issues caused by sanctions imposed on Russian export-oriented companies. We do not exclude a scenario with gondola car oversupply putting pressure on rental rates. Considering the lag between spot and company contract rental rates, the negative impact on the company's financials may be delayed until 2H22e.

The company will host a conference call today at 1:00 p.m. London (15:00 Moscow time). Conference call dial-in details: +44 330 165 4012 (UK), +7 495 646 5137 (Russia). Conference code (language): 9396320# (English), 8863111# (Russian).