VimpelCom Ltd. (VIP), the worst performer among the most-traded Russian shares in the U.S. this year, will probably keep falling as weakening currencies in two of its biggest markets erode earnings, according to IFC Metropol.
Ukraine’s hryvnia has sunk 31 percent since the nation’s bloody standoff with Russia began in November, while the ruble is down 4.6 percent. Those losses, the worst among major eastern European countries, are cutting into the wireless phone company’s dollar-based financial results.
The company yesterday lowered its 2014 sales and earnings targets after trailing analysts’ estimates in the first quarter, citing increased competition and currency declines. VimpelCom, which is listed on the Nasdaq Stock Market, fell 5.4 percent to $7.81 in New York. It was the worst performance on the Bloomberg gauge of the most-traded Russian shares in the U.S, which rose 0.2 percent. The wireless provider has plunged 40 percent this year, compared with the index’s 17 percent decline.
Revenue and earnings before interest, taxes, depreciation and amortization will drop by a “low to mid-single digit” percentage this year, the company said. It had previously predicted both would be “stable.”
The ruble has gained 5.8 percent from this year’s low on March 14 and traded yesterday at 34.618 per dollar. The hryvnia fell 19 percent during the period to 11.93.
The company, which is controlled by the Russian billionaire Mikhail Fridman, operates in more than a dozen countries. About 39 percent of its 2013 revenue came from Russia, its largest market, data compiled by Bloomberg show. Ukraine was the fourth-largest, accounting for 7 percent of sales.
VimpelCom sank to the lowest since July 2012 on trading volume about 2.9 times the average of the past three months. OAO Mobile TeleSystems (MBT), Russia’s biggest mobile phone company, gained 1.5 percent to $17.61 in New York. OAO MegaFon (MFON), the second-biggest, increased 2 percent to $27.35 in London.
VimpelCom’s revenue is expected to decline for third consecutive year in 2014, falling 6.6 percent to $21.1 billion, before resuming growth in 2015, according to the average estimate of 11 analysts surveyed by Bloomberg.
Source: Bloomberg
