Департамент торговых идей

The growth of the economy of Kazakhstan in the first quarter of 2019 slowed slightly to 3.8% yoy from 4.1% yoy in 2018 and was within the government's forecast for the entire current year. As the oil output set to decline due to technical works at the country's largest fields, it can be expected that the economy will also slow down in the second quarter. In this environment, the increase in government spending aimed at increasing the incomes of the population supports the growth of activity in the non-primary sector via increased consumption.

Inflation in April remained at the level of the previous month at 0.5%. In annual terms, it slightly increased by 0.1pp to 4.9%. Consumer price dynamics continues to be influenced by the reduction and freezing of tariffs of state monopolies at the beginning of this year. 

The company produced 2.4mn lbs of uranium, which corresponds to the level of last year. The main mining site Cigar Lake showed an increase in mining by 9% y/y, while the shutdown of production at the McArthur River and the share of production at Inkai contributed to a decrease in total production. Fuel services in physical volumes amounted to 3.8mn kgU, a decrease of 3% y/y.

Based on the results of 2018, NAC Board of Directors recommended to spend T80bn from 2018 profit on dividends in the amount of T308.46/share (one GDR is equal to one ordinary share). The decision to pay dividends is subject to approval by shareholders at the AGM on May 30. If approved, the payment of dividends for the 2018 starts from June 18, fixing the register of shareholders will be held on June 16 at midnight.  

During the reporting period, the Company produced 183 563 oz of gold (+ 41% y/y), of which 82% was produced at Kumtor (+ 50% y/y) due to an increase in the average grade and recovery rate and 18% at Mount Milligan (+13 %  y/y) due to increased throughput capacity. The latter also produced 5 171 tons of copper (+ 86% y / y).

According to RAS financial statements, Aeroflot's revenue for 1Q2019 amounted to 114 026 mn RUB (+ 21,1% y /y), whilst cost of sales totaled to 133 039 mn RUB (+ 25,8% y/y). General, selling and administrative expenses increased by 16,9% y/y to RUB 11 290 mn. The net loss of the Company reached RUB 16 850 mn (+ 92.6% y/y).

According to Nostrum's operating results for 1Q2019, average daily production amounted to 32.6ths boe/d against 32.9ths boe/d in 1Q2018. With an average daily sales volume of 31.6ths boe/d, the Nostrum expects a 1Q2019, revenue of $95mn versus $94mn in 1Q2018, and $112mn in 1Q2017. 

Copper production in 1Q2019 increased to 70 ktons (+4% y/y), gold production decreased to 43.4 koz (-13% y/y), zinc production amounted to 6.2 ktons (-56% y/y) and silver production decreased to 626 koz (-27% y/y). The company confirmed its production targets for 2019 at the level of 300 ktons of copper, 170-185 koz of gold and 3,000 koz of silver, while the production of zinc in concentrate is expected to be lower than the planned 50 ktons. As of March 31 2019, the Company's net debt increased from USD1 986 mn at the end of 2018 up to USD2 487 mn, which was mainly due to the payment for the acquisition of the Baimskaya copper deposit in the amount of USD436 mn, as well as capital expenditures for the expansion of Aktogay in the amount of USD92 mn.

According to the results of 1Q2019, the Company reduced revenue by 3.3%  y/y to 35 180 mn KZT, EBITDA excluding non-recurring costs amounted to 14 024 mn KZT (+ 12.6% y/y), while EBITDA margin at 39.9% (34.2% in 1Q2018). During the reporting period, Kcell's operating loss amounted to -8 275 mn KZT (-239.5% y/y), net loss amounted to -8 751 mn KZT (-471% y/y). The Company's net financial expenses decreased to KZT 2 146 mn (-7.3% y/y). Subscriber base at the end of 1Q2019 amounted to      8  741 thousand against 9 958 thousand in 1Q2018. The Company’s Board of Directors recommended dividends for 2018 at the level of 29,86KZT/share. The total amount of recommended dividends amounts to KZT 5 972 mn or 70% of the net profit for 2018.

KazTransOil decided to pay 100% of its net profit for 2018 (T38.5bn) and part of retained earnings of previous years (T1.5bn) for dividend payment, which corresponds to the size of the dividend at T104/share. The AGM will take place on May 28th.