Segezha Group Segezha

Segezha Group is one of the largest Russian vertically integrated timber holdings with a full cycle of logging and deep wood processing. The holding includes Russian and European enterprises in the forestry, woodworking and pulp and paper industries.

The geography of the Group's representative offices covers 12 countries. Production assets are located in 7 countries of the world and in 6 regions of the Russian Federation. The products are sold in 88 countries of the world.

The main areas of activity of Segezha Group of Companies

Performance indicators

2023: Loss - 15.98 billion rubles

The net loss of the Segezha Group timber holding company under the IFSO in 2023 amounted to 15.98 billion rubles against 6.05 billion rubles in profit a year earlier. Revenue decreased by 9%, to 88.5 billion rubles. The company published such data at the end of March 2024.

OIBDA (operating income before depreciation of fixed assets and intangible assets) in 2023 fell 2.5 times, to 9.28 billion rubles. OIBDA margin was 10% versus 24% a year earlier.

Segezha Group

Segezha Group's debt level in 2023 exceeded 13x in terms of net debt/EBITDA ratio. President of the timber holding Mikhail Shamolin said that the company plans to carry out additional capitalization in 2024 to reduce the debt burden. By the end

In 2023, the Segezha Group reduced the volume of capital investments by a third - to 6.84 billion rubles from 10.18 billion rubles. Including in the fourth quarter, investments amounted to 1.36 billion rubles (-37%). The volume of net debt by the end of 2023 remained practically unchanged compared to 122.6 billion rubles, the group said in a statement.

According to Valentin Gavrilov, director of Strategy Partners' LPK practice, Segezha's revenues decreased largely due to the loss of the European market and a change in business emphasis towards a less profitable Chinese market. In China, in 2023, there was a decrease in demand in the construction industry, which for Segezha resulted in a decrease in the supply of forest products to the Celestial Empire and a decrease in its prices in the country, the expert added.

By the end of 2023, Segezha Group is one of the largest Russian timber holdings with a full cycle of harvesting and deep processing of wood. The geography of assets covers three countries, and products are represented in the markets of more than 80 countries.^[2]

2022: Revenue growth by 15% to RUB 106.77 billion

Segezha Group's revenue in 2022 increased by 15% compared to the previous year and reached 106.77 billion rubles (in 2021, revenue was measured at 92.44 billion rubles). The rise, as explained in the timber holding, occurred mainly due to the effect of the consolidation of the assets of the Novoeniseysky forest chemical complex and Inter Forest Rus, which became part of the group in the second half of 2021.

Segezha Group's OIBDA margin in 2022 decreased from 32% to 23%, net debt/adjusted OIBDA ratio rose from 2.22 to 4.92. Net profit decreased by 60%, to 6.05 billion rubles (profit in 2021 - 15.24 billion rubles) following a decrease in operating profit and an increase in interest expenses. Free cash flow at the end of 2022 26.3 billion rubles. Net debt for the year increased by 65%, to 101 billion rubles, due to the consolidation of new assets.

The holding's capital expenditures in 2022 increased by 56% and amounted to 10.2 billion rubles amid adjustments to the investment program during a period of high macroeconomic uncertainty, the company said in its materials.

Since July 10, 2022, the Russian forest industry has been under sanctions, under which the EU has banned the export of all products from the Russian Federation. Almost all Segezha Group products fell under foreign restrictions: wood and its products, lumber, wood boards, plywood, paper, cardboard and other products.

European sanctions led to a drop in the company's operating and financial results in the 2nd half of the year and caused a correction in prices in the Russian forest market. Local exporters in the summer of 2022 began to rebuild sales channels, but not everyone was able to quickly find new buyers abroad.^[3]

History

2023

Sale of European business for €1

Segezha sold the European business at a symbolic price. Some details about the deal in May 2023 were told by the president of the Russian timber holding Mikhail Shamolin.

The deal was made for about 1 euro, but with a debt that on Segezha Packaging remained to the Segezha pulp and paper mill in the region of 100 million euros, he told reporters, adding that taking into account the amount of debt, the valuation of the European asset corresponds to the pre-crisis level.

Segezha sells European business at symbolic price

According to Shamolin, the sale of factories in Europe was almost the only option to keep this business running. Due to the fact that Segezha Packaging belonged to a Russian company, since July 2022, the supply of raw materials to its plants has become impossible, he explained: the European Union has banned the import of Russian timber products as part of the fifth sanctions package. In addition, the company could not purchase raw materials on the European market, and they refused to buy finished products - bags and other paper packaging - because of its connection with the Russian group, the top manager added.

This business as a whole has never given much EBITDA, "the head of the company emphasized, adding that Segezha has already found sales markets for this volume of products.

As the vice president of the company Vladimir Travkov clarified, Segezha Group does not expect the debt to return in a short time, since it is on the balance sheet of Segezha Packaging.

As the situation normalizes, we discuss with them in what schedule they will be able to repay our debt, "he added.

Segezha Packaging plants, which became part of the group in 2014, are located in Germany, Denmark, the Netherlands, Italy, the Czech Republic, Turkey and Romania, their total capacity is about 700 million paper bags per year, or about 50% of similar production Segezha Group.^[4]

Sale of European packaging plants

Segezha Group Holding has sold seven European paper packaging plants. The president of the group, Mikhail Shamolin, spoke about this at the end of March 2023. He did not disclose the amount of the transaction and other details (including the name of the buyer), noting only that it was "market."

The president of Segezha explained that the assets were sold due to the fact that against the background of anti-Russian sanctions, the company could not support their operating activities.

Against the background of anti-Russian sanctions, the company could not support their operating activities

We could not supply [enterprises] with paper due to sanctions restrictions. On the other hand, these enterprises could not buy paper on the European market, because manufacturers refused to supply it to them, and customers refused to buy products, due to the fact that the owner of the assets is a Russian company, he explained (quoted by Vedomosti).

We are talking about seven factories for the production of paper packaging in Germany, Denmark, the Netherlands, Italy, the Czech Republic, Turkey and Romania with a total capacity of 704 million bags per year. After the sale of these facilities, the Segezha Group remained packaging factories in Karelia, Moscow Region and Rostov Region with a total capacity of 878 million bags per year. The company viewed European factories primarily as a sales channel for its paper in the European market, rather than a source of profit. Now the company redirected all the paper that was supplied there, as well as the rest of the timber products (lumber, glued beams, CLT panels, etc.) to other countries.

Earlier, Mikhail Shamolin said that the company is considering the creation of capacities for the production of paper packaging in other countries, including Turkey Egypt REPUBLIC OF SOUTH AFRICA Malaysia,,,,,. Vietnam China Mexico However, on March 31, 2023, he clarified that the construction of production facilities in new countries was postponed by the group for the long term.^[5]

Building an IT Company - Segezha Digital Solutions

The Segezha Group timber holding company has created its IT company - Segezha Digital Solutions. It will be engaged in centralized management of corporate information systems, analysis and implementation of information technologies, software development, search for business growth points through the introduction of digital solutions, automation of Segezha Group business processes. This became known on February 1, 2023. Read more here.

2019

SG employs 13 thousand people. Segezha Group is the largest forest user in the European part of Russia, the total area of ​ ​ the leased forest fund is 7.42 million hectares of leased forest plots, 85.7% (6.36 million hectares) are certified according to the FSC scheme.

2018

SG employs 13 thousand people. Segezha Group is the largest forest user in the European part of Russia, the total area of ​ ​ the leased forest fund is 6.8 million hectares, 96% of which is certified. Segezha Group ranks 1st in Russia (52% of the market) and 2nd in Europe (16, 3% of the market) for the production of paper bags. 1 in Russia (71% of the market) and 4 in the world for the production of high-quality unbleached bag paper. 5th place in Russia and 7th place in the world in the production of large-format birch plywood. 1 place in Russia for the production of lumber and for the production of houses from glued timber.

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