Sistema-Hals Announces Plans to Slash Costs, Jobs

Sistema-Hals, the property company controlled by billionaire Vladimir Yevtushenkov, announced plans to cut its work force and reduce costs as the country's real estate market stalls.

The company will slash its work force by 40 percent next year as it seeks to halve overhead to about $40 million, it said in a statement on Thursday.

Sistema-Hals Global Depository Receipts rose 36 percent on the news, its biggest one-day gain in 10 days. Shares declined 3.7% on Monday, and have fallen by 95% this year.

"The market seems to be reacting to the fact that they are finally taking steps to improve their situation and are making some hard decisions," said Barry Schumaker, an analyst at Uralsib Financial Corp., who has a "buy" recommendation on the stock. "The problems are still there."

The company's net loss narrowed in the first nine months to $72.5 million from $77.6 million in the same period last year, the Moscow-based developer said in a separate statement today. Revenue climbed 57 percent to $326 million.

The company next year will focus on projects "with financing either in place or expected to come that can be carried out with co-investors and are either at or ready to move into construction stage," Sistema-Hals said today. Projects that are at an early stage of development will be restricted "to internal agreements which do not require material financial expenditure."

Sistema-Hals this month sold two construction units as part of the plan to raise financing, it said. Billionaire Roman Abramovich will gain control of the units after minority shareholders of his Infrastructure company bought the units, Vedomosti reported last week, citing an unidentified Sistema official and an unidentified person close to Abramovich.