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. Last Updated: 07/27/2016

Rostelecom Profits Decline Despite First-Half Sales Rise

Rising first-half sales at Rostelecom, the nation’s largest long-distance telephone company, failed to generate similarly healthy gains in profits in results released Wednesday.

Net revenues rose to 8.29 billion rubles ($299 million) from 6.55 billion rubles a year earlier, while pretax profit edged down to 1.15 billion rubles from 1.29 billion rubles and net profit, to domestic standards, eased to 626.06 million rubles from 954.38 million rubles.

The 1.74-billion-ruble rise in sales was nearly matched by a 1.39-billion-ruble rise in costs.

The company’s operating profit actually rose in line with expectations, though without enough vigor to change analysts’ view that the company was an under-performer with a cloudy future.

Operating profit moved up to 2.69 billion rubles from 2.64 billion rubles, and analysts said a depreciation charge of 2.74 billion rubles indicated the company was doing better.

Andrei Braginsky, telecoms analyst at Renaissance Capital brokerage, said the results were neutral and Renaissance left a hold on the stock.

He said domestic standard accounts include net, rather than gross, revenues from foreign operators, unlike international accounting standard.

Margins were hurt by a doubling in depreciation, and earnings before interest, tax, depreciation and amortization as calculated by the brokerage were up 9 percent in dollar terms to $190.6 million versus $174.2 million, he said.