OREANDA-NEWS. February 16, 2010. In our view, the production results posted are fairly good, given that the first half of 2009 saw weak demand for phosphate fertilizers. We expect the company to have made a net income in FY 2009 of RUB 6.3 billion under RAS and foresee a significant dividend payout on its preferred shares.

Apatit produced 2.75 million tons of apatite concentrate (in terms of 100% P2O5) in 2009, 3.1% down on the previous year, Prime-Tass reported. Given the weak demand for phosphate fertilizer in 1H 2009, we regard these production results as positive. The company has seen a much smaller drop in production than could have been expected in the face of the economic downturn in 2009.

Despite the marginal production downturn, we expect robust FY 2009 financial results from the company, with our expectations based on its strong RAS financials for the first nine months of 2009, as shown by EBITDA of RUB 5.6 billion and a net income of RUB 5.5 billion, with the corresponding margins of 30% and 29%. We forecast the company to make a net RAS income of RUB 6.3 billion in FY 2009 and expect it to pay a strong dividend on prefs; at least 10% of RAS net income, or 20% under an optimistic scenario, which equate to respective dividend yields of 7% and 14%.