Bloomberg News

Lukoil’s Surprise Profit Fuels Futures: Russia Overnight

March 12, 2013

RTS Index futures rose after companies from OAO Lukoil (LUKOY:US) to CTC Media Inc. reported earnings that exceeded analysts’ estimates, bolstering optimism among Russian stock investors.

Futures added 0.3 percent to 154,420 in U.S. hours yesterday, following a 0.9 percent gain in the nation’s Micex Index to the highest level since Feb. 20. OAO Gazprom, Russia’s natural gas export monopoly, OAO RusHydro, the country’s biggest hydropower company, and No. 1 lender OAO Sberbank extended gains in evening trading in Moscow. The Bloomberg Russia-US Equity Index (RUS14BN) of the most-traded Russian stocks listed in the U.S. fell 0.6 percent to 101.98, led by OAO Mechel.

The five companies on the Russia 14 gauge that have reported 2012 earnings, including Lukoil, CTC and Yandex NV, posted profit that was on average 4.7 percent higher than analysts estimated, according to data compiled by Bloomberg. Sales reported by the six companies on the 50-stock Micex that have announced full-year results beat projections by 2.6 percent, the data show. The Micex has climbed 2 percent in 2013.

“Russian companies are showing promising signs,” Ivan Manaenko, head of research at Veles Capital LLC in Moscow, said by phone yesterday. “It’s not an easy environment. Yet many of them managed to cut costs, increase sales and keep a forward- looking perspective when it comes to investments.”

The Market Vectors Russia ETF (RSX:US), the biggest U.S.-traded exchange-traded fund that holds Russian shares, declined 0.7 percent to $29.27 yesterday. The RTS Volatility Index, which measures expected swings in the index futures, retreated 1.7 percent to 20.97.

Lukoil, CTC

Lukoil’s 2012 adjusted earnings of $14.47 per share were 0.4 percent above the average of 15 analyst estimates compiled by Bloomberg. Futures rose 0.1 percent after the shares capped a five-day rally yesterday.

CTC Media, which had the biggest gain on the Russia-US gauge this year, reported adjusted earnings per share of $1 for 2012, exceeding analysts forecasts by 3 percent. The company’s American Depositary Receipts have surged 56 percent this year.

The ADRs rose 1.1 percent to $12.12 yesterday, the highest level since Sept. 16, 2011. The stock was raised to neutral from the equivalent of sell at Credit Suisse Group AG.

“We are starting to see a rebound in the Russian market as strong earnings outweigh a decline in oil prices,” Ilya Kravets, director of investment research at Daniloff Capital LLC in New York, said by phone yesterday. “Investors expect a very good dividend season in Russia.”

Trailing Estimates

In the same period last year, the 13 companies on the Russia-US measure that reported annual results posted earnings on average 0.6 percent below what analysts estimated, data compiled by Bloomberg show.

Mechel (MTL:US), Russia’s biggest maker of steelmaking coal, fell 4.4 percent to $5.40 in New York yesterday. Renaissance Capital Ltd. cut its share-price estimate by 12 percent to $6.50 and reiterated its buy rating in an e-mailed report yesterday.

“The stock remains a very risky play,” Boris Krasnojenov and Vasiliy Kuligin, Moscow-based analysts at Renaissance, wrote in the report. “Our rating is primarily justified by our positive long-term view on coking coal.”

Yandex NV, Russia’s biggest Internet company, rose 0.4 percent to $25.03, the highest since Feb. 15. Investors including BC&B Holdings B.V., Belka Holdings Ltd., Ilya Segalovich and Emerald Trust will sell 24.3 million Class A shares, Yandex said in a statement yesterday.

Currency, Oil

Futures expiring in March on Russia’s ruble showed the currency strengthening 0.1 percent to 30.757 per dollar yesterday, as the ruble fell 0.1 percent versus the dollar in Moscow to 30.7175. The currency gained 0.2 percent to 34.9171 against the dollar-euro basket used by the central bank to minimize swings that hurt exporters.

Oil for April delivery rose 0.1 percent to $92.06 a barrel in New York. Futures are down 14 percent from a year earlier. Brent oil climbed dropped 0.6 percent to $110.22 a barrel on the London-based ICE Futures Europe exchange. Urals crude fell 0.7 percent to $106.86.

The Moscow Exchange will start moving to a two-day transaction settlement system on March 25 for Russian government OFZ bonds and the most liquid equities, the bourse said in an e- mailed statement yesterday.

United Co. Rusal (486), the world’s largest aluminum producer, dropped 0.2 percent to HK$4.20 in Hong Kong trading as of the city’s noon break. The MSCI Asia Pacific Index fell 0.3 percent.

To contact the reporter on this story: Halia Pavliva in New York at hpavliva@bloomberg.net

To contact the editor responsible for this story: Emma O’Brien at eobrien6@bloomberg.net


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Companies Mentioned

  • LUKOY
    (Lukoil OAO)
    • $56.68 USD
    • -0.78
    • -1.38%
  • RSX
    (Market Vectors Russia ETF)
    • $24.11 USD
    • -0.46
    • -1.91%
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