HMS Group (HMSG)
HMS Group: 6M 2019 IFRS Results
25-Sep-2019 / 18:05 MSK
Dissemination of a Regulatory Announcement that contains inside information
according to REGULATION (EU) No 596/2014 (MAR), transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
HMS Group Reports 2Q 2019 Profit of Rub 321 million
Moscow, Russia - September 25, 2019 - HMS Group Plc (the "Group") (LSE:
HMSG), the leading pump, oil & gas equipment and compressor manufacturer and
provider of flow control solutions and related services in Russia and the
CIS, today announces its financial results for the six months ended June 30,
2019.
Financial highlights 6 months 2019:
- Revenue: Rub 23.4 bn (+15% yoy)
- EBITDA[1]: Rub 2.0 bn (-41% yoy), EBITDA margin at 8.3%
- Operating profit: Rub 607 mn (-70% yoy)
- Profit (loss) for the period: Rub (173) mn
- Total debt: Rub 20.0 bn (+8% yoy)
- Net debt: Rub 15.6 bn ( +15% yoy)
- Net debt-to-EBITDA LTM ratio: 2.97x
Operational highlights 6 months 2019:
- Backlog: Rub 43.4 bn (+35% yoy)
- Order intake: Rub 24.5 bn (+33% yoy)
GROUP PERFORMANCE
Results
in millions of 6m 2019 6m 2018 Change 2Q 2019 1Q 2019 Change
Rub yoy qoq
Orders 24,541 18,401 33% 13,054 11,487 14%
Backlog 43,412 32,215 35%
Revenue 23,419 20,343 15% 14,565 8,854 65%
EBITDA 1,953 3,319 -41% 1,452 501 190%
EBITDA margin 8.3% 16.3% 10.0% 5.7%
(Loss)/Profit (173) 961 na 321 (494) na
for the period
Free cash flow (1,918) (1,483) na 864 (853) na
ROCE 8.3% 14.8% 8.3% 10.8%
Order intake grew by 33% to Rub 24.5 billion based on growth in all business
segments. In terms of contracts type, both recurring business and large
contracts contributed to this growth.
Backlog of HMS Group grew to Rub 43.4 billion by 35% compared with Rub 32.2
billion last year, driven by all business segments except construction. In
terms of contracts type, the growth was based on the recurring business and
large integrated contracts also.
Revenue grew to Rub 23.4 billion, up by 15%, compared with Rub 20.3 billion
for 6m 2018. Compressors and pumps contributed to this growth. EBITDA was
down by 41% yoy to Rub 1.9 billion mainly due to negative results of oil &
gas equipment segment.
Revenue from recurring business was up by 45% yoy. Large projects' revenue
decreased by 17% yoy. EBITDA from recurring business declined 6% yoy and
large projects contracted by 54% yoy.
EBITDA margin equaled 8.3%.
Depreciation & amortization was Rub 1.1 billion, up 28% yoy, compared with
Rub 866 million for 6m 2018 due to acquired assets in 2018-2019.
Profit for 2Q 2019 at Rub 321 million didn't compensate loss in 1Q 2019, and
loss for the period equaled Rub 173 million, compared with profit for the
period of Rub 961 million for 6m 2018.
Free cash flow decreased to Rub (1.9) billion from Rub (1.5) billion for 6m
2018 because of Rub 700 million acquisition made in Feb 2019.
ROCE decreased because of lower operating profit for the last twelve months
and higher average capital employed.
Expenses and Operating profit
in millions of 6m 6m 2018 Change Share of Share of
Rub 2019 yoy 6m 2019 6m 2018
revenue revenue
Cost of sales[2] 18,985 14,664 29% 81.1% 72.1%
Materials and 12,815 8,650 48% 54.7% 42.5%
components
Labour costs incl 3,433 3,539 -3% 14.7% 17.4%
Social taxes
Depreciation and 941 747 26% 4.0% 3.7%
amortization
Construction and 917 732 25% 3.9% 3.6%
design and
engineering
services of
subcontractors
Others 878 996 -12% 3.7% 4.9%
Cost of sales was Rub 19.0 billion, up 29% yoy, compared with Rub 14.7
billion for 6m 2018, because, on the one hand, HMS portfolio consists of
less profitable contracts than last year, and on the other hand, large
contracts under execution have higher share of outsourced components in cost
of sales (compressor contracts). Materials and components (+48% yoy),
required for manufacturing, almost fully attributed to this growth.
Gross profit was down 22% yoy to Rub 4.4 billion, compared with Rub 5.7
billion for 6m 2018.
in millions of 6m 6m 2018 Change Share of Share of
Rub 2019 yoy 6m 2019 6m 2018
revenue revenue
Distribution and 951 933 2% 4.1% 4.6%
transportation
General and 2,753 2,585 6% 11.8% 12.7%
administrative
SG&A expenses 3,704 3,519 5% 15.8% 17.3%
Other operating 122 104 18% 0.5% 0.5%
expenses
Operating 3,827 3,623 6% 16.3% 17.8%
expenses ex. Cost
of sales
Operating 607 2,056 -70% 2.6% 10.1%
loss/profit
Finance costs 838 772 9% 3.6% 3.8%
Distribution and transportation expenses were Rub 951 million, up 2% yoy,
compared with Rub 933 million for 6m 2018, mainly due to an increase in
transportation expenses (+3% yoy). As a share of revenue, distribution and
transportation expenses was down to 4.1% compared with 4.6% last year.
General and administrative expenses were Rub 2.8 billion, up 6% yoy,
compared with Rub 2.6 billion last year, mainly due to higher labour costs
incl. social taxes (+6% yoy). In contrary, as a share of revenue, general
and administrative expenses decreased to 11.8% from 12.7% for 6m 2018.
SG&A expenses[3] grew to Rub 3.7 billion, up 5% yoy. But as a share of
revenue, they declined to 15.8% from 17.3%.
Operating profit was down to Rub 607 million, compared with Rub 2.1 billion
last year (-70% yoy).
in millions of Rub 6m 2019 6m 2018 Change yoy
Finance costs 838 772 9%
Interest expenses 827 767 8%
Interest rate, average 8.8% 8.8%
Interest rate Rub, average 8.9% 8.9%
Finance costs were Rub 838 million, up by 9% yoy, compared with Rub 772
million for 6m 2018. The main factor was an increase of interest expenses
(+8% yoy) due to a higher total debt level. Average rates stood unchanged at
8.8% p.a.
BUSINESS SEGMENTS PERFORMANCE
Industrial pumps[i]
in millions of 6m 2019 6m 2018 Change 2Q 2019 1Q 2019 qoq
Rub yoy
Orders 10,572 8,444 25% 5,011 5,561 -10%
Backlog 19,398 15,744 23% 19,398 19,303 0%
Revenue 7,980 7,334 9% 4,739 3,241 46%
EBITDA 1,068 876 22% 793 275 188%
EBITDA margin 13.4% 11.9% 16.7% 8.5%
Order intake of industrial pumps grew by 25% yoy based on both recurring
business and large contracts.
Backlog grew by 23% yoy to Rub 19.4 billion only because of increase in
recurring orders received.
Revenue was Rub 8.0 billion, up 9% yoy, compared with Rub 7.3 billion for 6m
2018. EBITDA increased to Rub 1.1 billion, by 22% yoy, from Rub 876 million
due to both recurring business and large contracts. EBITDA margin recovered
to 13.4%.
Oil and Gas equipment & projects (OGEP)[ii]
in 6m 2019 6m 2018 Change yoy 2Q 2019 1Q 2019 Change qoq
millions
of Rub
Orders 6,686 5,516 21% 3,679 3,008 22%
Backlog 7,550 4,594 64% 7,550 7,265 4%
Revenue 5,934 11,185 -47% 3,528 2,406 47%
EBITDA (250) 2,084 na (120) (130) na
EBITDA -4.2% 18.6% -3.4% -5.4%
margin
Order intake increased to Rub 6.7 billion from Rub 5.5 billion, fully due to
recurring contracts. In 1H 2018, there were no large contracts signed, and
order intake was fully composed of recurring orders.
Backlog was up to Rub 7.6 billion from Rub 4.6 billion, also based on
recurring contracts.
Revenue was down 47% yoy to Rub 5.9 billion, compared with Rub 11.2 billion
for 6m 2018. EBITDA and EBITDA margin turned negative due to the lack of
large contracts under execution combined with a mix of recurring contracts,
that had margins lower than usual.
Compressors[iii]
in 6m 2019 6m 2018 Change yoy 2Q 2019 1Q 2019 Change qoq
millions
of Rub
Orders 7,177 4,666 54% 4,278 2,900 48%
Backlog 14,854 8,614 72% 14,854 16,880 -12%
Revenue 8,938 3,403 163% 6,006 2,932 105%
EBITDA 835 336 148% 458 377 21%
EBITDA 9.3% 9.9% 7.6% 12.9%
margin
Order intake was up 54% yoy to Rub 7.2 billion, compared with Rub 4.7
billion, mainly due to large contracts signed.
Backlog gained 72% yoy to Rub 14.9 billion compared with Rub 8.6 billion
last year.
Revenue demonstrated a significant 163% yoy growth to Rub 8.9 billion, based
both on recurring business and large contracts. EBITDA grew 148% yoy to Rub
835 million. EBITDA margin declined to 9.3% compared with 9.9% for 6m 2018
due to outpacing growth of revenue.
Construction[iv]
in 6m 2019 6m 2018 Change yoy 2Q 2019 1Q 2019 Change qoq
millions
of Rub
Orders 105 (226) na 87 18 374%
Backlog 1,610 3,263 -51% 1,610 1,899 -15%
Revenue 695 806 -14% 359 336 7%
EBITDA 15 (161) na 4 11 -61%
EBITDA 2.2% -20.0% 1.2% 3.3%
margin
Order intake equaled Rub 105 million. Backlog declined to Rub 1.6 billion,
compared with Rub 3.3 billion last year, due to execution of two large
contracts signed in 2017-2018.
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