Segezha Group announces IFRS results for Q1 2019

Moscow, 24 June 2019 – Segezha Group, a leading Russian vertically integrated forest holding with a with a full cycle of logging and advanced wood processing, and a Sistema (LSE:SSA; MOEX:AFKS) company, announces its unaudited consolidated financial results in accordance with International Financial Reporting Standards (IFRS)1 for the first quarter of 2019.

 1Q 2019 financial highlights

  • Revenue in rouble terms grew by 19.4% year-on-year to RUB 14.5 billion.

  • OIBDA rose by 82.4% year-on-year to RUB 4.0 billion. The OIBDA margin was 27.4%.

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

"In the first quarter of 2019 Segezha Group delivered a record OIBDA margin of 27.4%, which is among the highest in the industry globally. This was due to OIBDA growth of 82.4% YoY and a reduction in costs across the Group.

 “The Group's revenue rose by 19.4% year-on-year, while costs were down by 6.4%. We have managed to keep our production costs flat year-on-year despite rising raw material prices and pressure from other external factors. Our overall performance is in large part a result of taken measures to increase high margin paper types’ share in our product portfolio and improvements in the sales structure including traders’ commissions decrease and transition to an open-book contracts in sales of paper and packaging. Revenue growth was also driven by a surge in plywood sales following the commissioning of a new production line in July 2018. A key factor in holding down production costs was a reduction in costs for fuel oil and electric power as a result of the launch of a multi-fuel boiler at Segezha Pulp & Paper Mill that utilises bark waste as an alternative to costly fuel oil, as well as improvements in the energy efficiency of specific companies across the Group.

 “The strong results meant we were able to bring the net debt/OIBDA ratio down to 2.5x from 4.4x in Q1 2018, when the business was going through an active investments phase.

 “We spent the quarter closely scrutinising new investment projects. A new modernisation programme – dubbed Segezha West – is designed to boost production capacity to 850,000 t a year and to broaden the product portfolio. In addition to the brown paper that we already produce, we also plan to start making white paper and bleached pulp (from both hard and softwood). Stage 1 of the programme is scheduled for 2019. Another investment project with great potential is Segezha East, which focuses on a new biotech complex to be built in the Siberian town of Lesosibirsk. The plant will leverage the latest technology to produce 0.7 to 1.0 million t of pulp a year. We see strong potential in the pulp market due to rising demand from producers of paper packaging and sanitary paper, as well as e-commerce operators." 

Key financials


RUB billion

Q1 2019

Q1 2018


Revenue 2








OIBDA margin



9.5 p.p.

Operating income




Net income/(loss)




Net debt3




Net debt/LTM OIBDA








Foreign currency revenue



4.4 p.p.

  • Revenue in Q1 2019 increased by 19.4% to RUB 14.5bn. Most of the revenue growth was generated by the Paper & Packaging segment, which accounts for 60% of total sales. The increase in paper revenue was the result of changes in pricing policy in Paper & Packaging segment. Revenue growth was also driven by an increase in plywood sales following the commissioning of a new manufacturing plant in the Kirov region in July 2018. 

  • OIBDA growth was mostly due to increase of high margin products share in our portfolio and improvements in the sales structure, in addition to contained opex growth. All this led to a historical record high OIBDA margin of 27.4%.
  • Net profit increased following operating income as well as due to favourable FX trends.

  • Capex totalled RUB 1.5 bn, mostly on scheduled machinery maintenance.


 For further information please contact:

 PR Directorate

Anastasia Poletaeva

Phone: +7 499 962 82 00 ext. 10347

1 Here and hereinafter the consolidated financial results of LLC Segezha Group and its subsidiaries for 2018 are presented in accordance with the new reporting standards IFRS 9, 15 and 16, unless specified otherwise.

2 Revenue disclosed in Q1 2018 was RUB 11.5bn, as up until Q4 2018 the Group's revenue and selling expenses were adjusted for shipping costs (post risk transfer).

3 Total outstanding loan minus cash.

4 CAPEX is calculated as a sum of actual investment payments made throughout the reporting period.