M + S Hydraulic Q4’14 uncons net profit up 25% YoY as revenue increases, EBITDA margin improves; 2014 net profit up 8% YoY (NEUTRAL)

M + S Hydraulic Q4 2014 uncons sales increased 3.8% YoY to BGN 20m. Operating expenses advanced slower by 1.6% YoY which led to improvement in the EBITDA margin to 16.8% from 15% in Q4’13. Compensation and costs of hired services increased by 8.7% and 19% YoY respectively, but materials largely offset the increase by declining 4.8% YoY. Net financial income fell 71% YoY to BGN 40k finally shaping the reported BGN 1.6m net profit (+25% YoY). 2014 revenues reached BGN 89.8m, up 5.3% YoY. Export’s share in revenue remained unchanged at 83%. Operating expenses increased slower than revenue by 4.6% YoY, while the costs’ structure was preserved. Material costs and compensation costs increased by 4.6% and 6% YoY respectively, while costs of hired services advanced slower by 3.7% YoY. Thus, the EBITDA margin improved slightly to 21.7% from 21.2% in 2013. Net profit rose 8% YoY to BGN 11.4m with net financial income down to BGN 77k from BGN 347k in 2013. 2014 CFO improved to BGN 18.5m from BGN 13.8m in 2013 as inflows from clients rose 11.8% YoY to BGN 101m, while payments to suppliers added 7.5% to BGN 59m. Investment outflow was up to BGN 8.3m from BGN 6.7m in 2013. Thus, the cash position of the company increased to BGN 14m as of end-2014 (+BGN 2.7m versus end-2013). In Q4’14 M+S Hydraulic has set up a subsidiary in Germany, in which it contributed €325k and holds 90%. The company is going to service OEM customers.