INTERVIEW: Russia ChelPipe sees 2016 revenue rising 6.5% to 158 bln rbl

MOSCOW, Apr 26 (PRIME) -- Russia’s Chelyabinsk Pipe-Rolling Plant (ChelPipe) plans to increase revenue by 6.5% on the year to 158 billion rubles in 2016, majority shareholder Andrei Komarov told PRIME in an interview on Tuesday.

“We expect that revenue will stand at 158 billion rubles in 2016, EBITDA (earnings before interest, taxes, depreciation and amortization) will be flat on the year, and the volume of sales will be flat at about 2 million tonnes,” he said.

ChelPipe believes that prices for flat steel will surge by 20–25% in April–June.

Russia’s total pipe sales are likely to amount to around 10.5 million tonnes in 2016, flat on the year, Komarov said.

In 2015, ChelPipe swung to a 6.04 billion ruble net profit, as calculated under International Financial Reporting Standards (IFRS). Revenue rose 15.8% to 148.37 billion rubles, EBITDA grew 27% to 28.9 billion rubles and pipe sales went down 2.6% to 2.019 million tonnes in the period.

CAPEX CUTS

ChelPipe’s capital expenditures are likely to decrease 35% on the year in 2016.

“Capital expenditures are falling this year. They stood at 6.9 billion rubles in 2015 and will amount to 4.5 billion rubles in 2016,” Komaov said.

ChelPipe has completed its major investment projects and now is investing in expansion; the company wants to extend its product line, he said.

ChelPipe plans to produce pipes with new types of rotary connection for the fields with hard to recover reserves, increase output of stainless pipes and boiler tubes, modernize facilities at the Kirinskoye gas condensate deposit on the shelf of Sakhalin, as well as improve quality of its products.

Russian businessmen Komarov and Alexander Fyodorov own about 85% in ChelPipe.

NOT TIME FOR IPO

ChelPipe still plans an Initial Public Offering (IPO) in the future, but conditions are unfavorable for it now, Komarov said.

“IPO is out of the question nowadays, taking into account the sanctions. We have almost no foreign financing. We do not give up this idea, but we need an appropriate moment and a sensible and effective decision. And a favorable and stable situation is necessary,” he said.

ChelPipe is to repay about 10 billion ruble debt this year, and plans to repay it with own money.

“Our net debt to EBITDA ratio stood at 3 as of the end of 2015, it is quite good compared with figures in the industry. The bulk of our debt is denominated is rubles. It will be decreased gradually until 2019 under the terms approved by the company and a syndicate of banks. We plan to take no new loans to repay old ones,” the businessman said.

(66.6295 rubles – U.S. $1)

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