Monbat’s Q4’14 sales increase 4.6%, while bottom line declines 9.7% (NEUTRAL)

Monbat reported Q4’14 revenues of BGN 71m, up by 4.6% YoY due to the 4.3% (BGN 2.9m) increase in sales of the Bulgarian unit and the 243% (BGN 0.9m) growth of recycled lead sales outside the group of the Romanian subsidiary. The recycled lead sales outside of the group of the Serbian subsidiary dropped by 43.3% YoY to BGN 0.9m. Q4’14 EBITDA declined 4.4% YoY to BGN 13.5m due to the 14.3% increase of materials cost. Compensation costs also increased by 7.6% YoY as the average workforce for Q4’14 grew on an annual basis following a capacity expansion. The EBITDA margin came at 19% compared to 20.8% for Q4’13. The net income came 9.7% YoY lower at BGN 8.8m despite the slightly lower net financial costs (down 8.2% YoY to BGN 869k) as depreciation allowances grew 14.9% YoY. 2014 revenues were down 4% YoY to BGN 230.6m as sales of batteries were down by 0.9% YoY (BGN 2.1m) due to the lower price of the end products. The combined sales of the Serbian and Romanian recycling subsidiaries outside the group also dropped 55.7% YoY (BGN 7.4m) as Monbat has reduced sales of recycled lead due to the low market quotes. The higher utilisation of lead internally and the good primary-recycled lead mix, however, helped the EBITDA margin to improve to 18.8% from 17.7% in 2013. EBITDA added 2.2% YoY to BGN 43.4m as materials cost declined 4.1% YoY. Hired services’ cost also declined by 12.2% YoY. Net income increased even more by 4.8% YoY to BGN 26.6m, boosted by the lower net interest cost (-48.1% YoY to BGN 1.1m) and the 74% lower FX loss. Receivables increased by BGN 5m YoY as the trade receivables were up BGN 3.5m and the receivables from Prista Oil Holding increased by BGN 2.6m. Deposits at Prista, however, slightly declined to BGN 18.1m at end-2014 from BGN 18.6m at end-2013. Inventories increased by BGN 2.6m due to the lower scrap sales. Interest-bearing debt was up by BGN 11.9m YoY to BGN 73.6m.