Q4’15 sales of Fazerles declined with 8.4% YoY; problems with the wood supply further deteriorated margins (NEGATIVE)

Q4 2015 revenue of Fazerles decreased with 8.4% YoY to BGN 4.0m, while materials’ expenses and compensation costs increased with 16.7% and 10.8% YoY, respectively. As a result, the total operating expenses grew with 6.1% on an annual basis, whereby the EBITDA declined with 86.7% YoY to BGN 90k and the EBITDA margin dropped to 2.3% from 15.6% in Q4’14. The D&A expenses remained virtually flat YoY and the net financial expenses were BGN 4k vs. a financial income of BGN 49k in Q4’14, leading to a net loss of BGN 315k, relative to a net income of BGN 192k in the corresponding year-ago period. On a cumulative basis, the revenue decreased with 9.4% YoY to BGN 16.6m and the OPEX declined with 3.8% YoY, resulting in an EBITDA of BGN 1.9m (-37.1% YoY) and an EBITDA margin of 11.6% vs 16.8% in 2014. With no significant changes below the operating line, 2015 net income declined with 76.5% YoY to BGN 346k and the net income margin dropped to 2.1%, compared to 8.0% in the year-ago period. On the balance sheet, the non-cash WC dropped to BGN 4.5m (-40.4% YTD) as the company continued to dispose of investments in financial instruments (down by BGN 1.25m since end-2014 to BGN 370K), where previously the company channelled its free cash. Inventories and receivables were also down – by 30.8% and 18%, respectively. The BGN 159k short-term IB debt was repaid, which reduced the IB Debt/Equity to 0.8% from 1.5% as of end-2014.