Segezha Group (MOEX: SGZH), a leading vertically integrated holding company in the timber industry performing a full cycle of operations from logging to advanced wood processing, announces its consolidated IFRS financial results and its operating results for the first nine months of 2021.

·         Revenue totalled RUB 68 bn, a 36% increase year-on-year (yoy), driven by a rebound in global demand and higher average selling prices for the Group's products, a trend that we observed in 1H 2021 and continued throughout 9M 2021.

·         Adj. OIBDA[1] reached RUB 24 bn, doubling yoy, driven by revenue growth, the company’s vertically-integrated business model and control over key cost items;

·         Adj.¹ OIBDA margin increased to 35% (+13 pp yoy);

·         Net profit was RUB 11 bn, compared to a net loss of RUB 5.5 bn a year earlier, thanks to strong operating performance, growth in revenue and business margins and the absence of a one-off loss on the revaluation of foreign currency loans in the corresponding period last year last year.

Mikhail Shamolin, President of Segezha Group, said:

"Segezha Group delivered exceptional financial results for the nine months 2021, with revenue increasing by more than a third and OIBDA jumping more than two-fold. These results are the outcome of excellent execution at a company that boasts a highly attractive business model – with additional tailwinds from a strong pricing environment for the company’s products. 

“Demand for all our core products remained robust throughout the reporting period. In the third quarter we benefitted from a particularly strong price environment, with paper and sawn timber prices up double-digits quarter-on-quarter and plywood and glulam prices spiking quarter-on-quarter by 65% and 93%, respectively. 

“The purchase of Inter Forest Rus assets, which we announced last month, scales up our business significantly and builds on our competitive advantages. The acquisition doubles our annual allowable cut, increases our forest land under lease by 1.5 times and makes us one of the largest producers of sawn timber globally. We are incredibly optimistic about the future of Russia’s wood products industry and look forward to leading the way in this market."

Rovshan Aliyev, Segezha Group's Vice President for Finance and Investment, noted:

“Our business continued to fire on all cylinders, with our OIBDA margin rising 13 percentage points to 35% in the nine months 2021. This places us firmly at the top of the industry globally in terms of margins.

“In the reporting period management’s successful efforts to control costs bore fruit, with revenue increasing at a faster pace than costs. We continued to decrease our debt, so net debt-to-OIBDA ratio went down to 1.1x as of the end of the third quarter.

“We consolidated the results of NLHK as of 15 September, and we expect this bolt-on acquisition to deliver a meaningful contribution to our financial results beginning in 4Q 2021."

CONFERENCE CALL AND WEBCAST

A conference call and webcast will take place on 2 November 2021 at 3:00 p.m. Moscow time (12:00 p.m. London time).

To participate in the call:

·         from Russia: +7 495 283 98 58

·         from Great Britain: +44 203 984 9844

·         from the United States: +1 718 866 4614

·         the numbers for other countries can be found on the website

Access code: 738667

Follow this link to participate in the webcast: https://mm.closir.com/slides?id=73866

A recording of the conference call will be available in the "For Investors and Shareholders" section on the website.

CONTACTS

[1] OIBDA is adjusted for RUB 1,981 mln as a result of a liquidity event, the Group’s IPO.

[2] Net debt reflected as of 31 December 2020 and 30 September 2021, OIBDA for the last 12 months