EMKA’s Q1’17 sales up 20.4% YoY; the net profit up 2.1x (POSITIVE)

Emka’s Q1’17 revenue increased by 20.4% YoY to BGN 24.7m, as its domestic sales grew by 24.4% YoY and its export sales (69.7% of the revenue) added 20.1%. At the same time, the operating expenses increased by 19.7% YoY, triggered mostly by higher materials (+18.8% to BGN 20.1m) and compensation (+15.6% to BGN 1.3m) expenses. As a result, the EBITDA added 27.0% YoY to BGN 2.4m and the EBITDA margin increased by 0.5 p.p. to 9.6%. With the D&A expenses dropping by 30.4% YoY to BGN 0.8m and with no other significant changes below the operating line, the Q1’17 EBT reached BGN 1.6m, up 2.1x YoY, and the EBT margin turned to 6.4% vs. 3.7% in the year-ago period. On the balance sheet, the non-cash WC increased by 24.6% YTD to BGN 20.0m, as receivables and the inventories grew by BGN 2.6m and BGN 1.4 to BGN 15.8m and BGN 7.6m, respectively, while the payables added only BGN 0.3m to BGN 2.0m. The short-term IB debt added BGN 0.6m to BGN 1.0m and the long-term IB debt remained at BGN 1.2m, whereby the IB Debt/Equity increased to 6.2% from 4.8% as of end-2016.