Neochim’s Q4’16 unconsolidated sales up 14.1% YoY, net profit of BGN 10.9m vs net loss of BGN 9.1m in Q4’15 (POSITIVE)

Neochim’s Q4’16 unconsolidated revenue increased by 14.1% YoY to BGN 73.3m, while its operating expenses decreased by 17.5% YoY to BGN 57.5m. The lower OPEX were mostly due to 10.0% lower materials costs (down to BGN 41.3m) and BGN 9.4m lower writedowns & provisions (down to BGN 1.9m), which fully offset the slight increase in the compensation and other services costs. As a result, the EBITDA turned to positive BGN 15.8m (EBITDA margin of 21.5%), opposed to negative BGN 5.5m in the year-ago period. With the D&A remaining virtually flat at BGN 3.0m and with no significant changes below the operating line, the net profit came to 10.9m, vs a net loss of BGN 9.1m in Q4’15, resulting in net profit margin of 14.8%. On a cumulative basis, the 2016 revenue decreased by 15.0% YoY to BGN 245.4m, but the OPEX declined by 25.8% YoY, leading to a 2.5x higher EBITDA - BGN 44.0m and EBITDA margin of 17.9% vs 6.1% in 2015. With no significant changes below the operating line, the net profit jumped 6.5x to BGN 29.4m and the net profit margin reached 12.0% vs. 1.6% in the previous year. On the balance sheet, the non-cash WC turned to negative BGN 12.5m vs positive BGN 3.7m as of end-2015, mostly on BGN 12.6m higher payables (up to BGN 36.7m), while the other components remained relatively flat. At the same time, the cash position expanded by BGN 52.1m to 52.6m. The long-term IB debt dropped by BGN 6.6m to BGN 9.0m and the short-term IB debt added BGN 8.0m to BGN 20.2m, whereby the IB Debt/Equity became 28.2% (36.4% as of end-2015).