Bulgartabac Holding Q2’15 sales increase 12% YoY while net income grows 14-fold (POSITIVE)

Q2’15 consolidated revenues of Bulgartabac Holding increased 12% YoY to BGN 139.1m. EBITDA surged almost 4-fold YoY to BGN 29.8m as cost of materials and compensation cost declined by 7.6% and 14.9%, respectively. Net income grew more than 14-fold YoY to BGN 19.7m. H1’15 revenues added 7.7% YoY to BGN 268.4m while EBITDA improved 85% YoY to BGN 50.2m. Below the EBITDA line net financial income improved to BGN 3.3m compared to BGN 5.8m net financial expenses in H1’14 on the back of FX gains. Net profit, however, increased by the lower 46.1% to BGN 36.2m (EPS of BGN 4.91) as the company had BGN 15.5m profit from discontinued operations in the comparable period of 2014. On the balance sheet, investment property, intangibles and investments in associated companies increased by BGN 30.1m, BGN 66.2m and BGN 18.3m, respectively. We attribute this assets growth to the acquisition of 66% stake in Baranco by Blagoevgrad BT and Sofia BT and the increase of the stake in the Bosnian subsidiary Fabrika Duvana by Blagoevgrad BT. Baranco is the biggest shareholder in Plovdiv-based Yuri Gagarin, which produces cigarette filters and paper packages. Inventories declined by BGN 30.9m while accounts payable and other accrued expenses increased by BGN 26.4m and BGN 19.3m, respectively. IB debt declined by BGN 24.4m to BGN 71.2m.