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Residential Developer PIK Says Demand Is Helping its Recovery

The residential developer posted a net loss of $361 million in 2009, down from a $1.135 billion shortfall in 2008. Denis Grishkin

Residential developer PIK said Friday that improving demand for housing was driving its recovery in 2010 from a market collapse that kept it in the red for a second straight year in 2009.

"Looking ahead, we see positive signs of market recovery, especially based upon Q1 2010 presales pattern," chief executive Pavel Poselenov said. "We feel that the demand from retail customers has come back. The outlook for the real estate sector is getting brighter and longer-term, the fundamentals for our business remain unchanged," he said.

PIK said its net loss narrowed to $361 million last year from a restated loss of $1.135 billion in 2008, while its normalized net loss widened to $68 million from $60 million.

Its Moscow-listed stock was down 4.9 percent, in line with rivals trading 5 percent to 10 percent lower and underperforming the broad market index, which lost 2.9 percent.

PIK's revenue fell 4 percent to $1.3 billion, and adjusted earnings from development before interest, taxes, depreciation and amortization rose 11.9 percent to $138 million from $124 million in 2008.

The company, which reduced net debt to $1.15 billion at the end of 2009 from $1.26 billion a year earlier, said it would focus on repairing the balance sheet through deleveraging its business in 2010.

PIK, 45 percent owned by tycoon Suleiman Kerimov's Nafta Moskva, saw total assets decline by 19 percent year on year to $3.95 billion.

"There is a shortage of affordable residential housing in Russia, the huge potential of a rapidly recovering mortgage market, a large obsolete housing stock … and the willingness of the nation to improve living conditions. These will be the key drivers for PIK Group's recovery and growth," it said.

The company, which builds low-income homes mostly in Moscow and the surrounding area, said in March that it expected to increase its housing completion rate by about 13 percent this year.

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