Segezha Group announces financial results for Q3 2018

Moscow, 20 November 2018 – Segezha Group, a leading Russian vertically integrated forest holding with a full cycle of logging and advanced wood processing and a portfolio company of Sistema (LSE: SSA, MOEX: AFKS), announces its unaudited consolidated financial results prepared in accordance with International Financial Reporting Standards (IFRS)1 for the third quarter of 2018.

Q3 2018 financial highlights

  • Revenue grew by 27.6% year-on-year, to RUB 15.4bn.
  • OIBDA 2 rose by 93.2% year-on-year, to RUB 4.3bn. The OIBDA margin was 27.9%

Mikhail Shamolin, President and Chairman of the Management Board of Segezha Group, said:

"In the third quarter of 2018, Segezha Group continued to demonstrate strong operating and financial performance in a favourable market environment. While revenue was up 27.6% year-on-year, the Group managed to contain the growth of costs (+15.4% year-on-year). Overall, we succeeded in achieving strong financial results on the back of growing output and sales, as well as rising prices for most of the company's key products. The OIBDA margin reached a new record high of 27.9%.

“The company's growth is in large part due to two major investment projects: the modernisation of Segezha Pulp & Paper Mill including the installation of a new paper-making machine and the roll-out of a second production line at the plywood mill in Kirov. These projects boosted output in two of the Group’s highest-margin products: paper and plywood.

“We also launched a new conversion line in the city of Salsk (Rostov region) to produce up to 25 million units of retail paper packaging per year. We believe this product has strong market potential and we expect Russia's consumption of paper packaging to grow from 0.8bn units in 2017 to 1 billion units per year by 2020. Given the market potential, the Group plans to further enhance its production capacity for paper packaging.

“In September JSC Karelia DSP, our producer of particle board that had been shuttered following a fire, resumed its operations after reconstruction. The plant uses state-of-the-art equipment that will enhance the controllability of all technological processes and the quality of products as well as making it possible to diversify our product range in the longer term."

Key financials

RUB bn

Q3 2018

Q3 2017










OIBDA margin



9,4 p.p.

Operating income




Net income




Net debt4




Net debt / LTM OIBDA








Foreign currency revenue



3,1 p.p.

  • Revenue was up 27.6% due to growth in sales volumes of and prices for paper, lumber and paper bags. The weakening of the rouble against the Euro by 10.1% year-on-year also had a positive impact on revenues.

  • OIBDA growth was supported by the increasing revenue and higher prices for several of the Group's key products. However, OIBDA was under pressure from rising costs of wood, fuel oil, and other materials and fuels. 62.7% of all of the logging done for Segezha Group in Q3 2018 was performed by the company's own resources, up 0.6 p.p. as a result of an increase in allowable cut to 7.5 million cubic metres3 .

  • Net income was roughly flat year-on-year. The growth of interest expenses and changes to exchange rates offset the increase in operating income.

  • CAPEX of RUB 1.5bn included the costs of the third stage of modernisation at Segezha PPM, as well as the construction of the new plywood mill in Kirov and a pellet production facility in the Krasnoyarsk region.

For further information, please contact:

Anastasia Malitsina
Public Relations
Phone: +7 499 962 82 00 ext. 10347

1 Here and hereinafter the consolidated financial results of LLC Segezha Group and its subsidiaries for Q3 2018 are presented in accordance with the new reporting standards IFRS 9, 15 and 16, unless specified otherwise. Financial results for Q3 2017 are shown net of the effect of new IFRS 9, 15 and 16 standards.
2 Unadjusted for the recent IFRS modifications, the Group's OIBDA in Q3 2018 would be RUB 4.0bn.
3 Unadjusted for the recent IFRS modifications, the Group's OIBDA in Q3 2018 would be RUB 4bn
4 Total debt owed to non-related parties and financial lease liabilities net of cash funds