Khartsyzk Pipe net income rises 40% yoy to USD 17.5 mln in 9M14



27 октября 2014 года
Конкорд Капитал

Харцызский трубный завод (HRTR)


Khartsyzk Pipe (HRTR UK) reported a 51% yoy increase in revenue to USD 159 mln during 9M14, despite a 26% yoy decline in tube production to 158 kt. EBITDA grew 114% yoy to USD 58 mln, and net income surged 40% yoy to USD 17.5 mln (EPS of USD 0.01/share).



Financial performance in 3Q14 deteriorated significantly compared to the previous quarter. Revenue plunged 64% qoq to USD 35.4 mln in 3Q14, and EBITDA dwindled 45% qoq to USD 12 mln. Net income fell 71% qoq to USD 4 mln, along with an abrupt 54% qoq decrease in large diameter tube production and sales in 3Q14 after the enterprise halted its operations in August, following warfare in the region and logistics disruptions.



Roman Topolyuk: The sole Ukrainian large diameter pipe producer demonstrated a yoy improvement in financials despite declining operations, which we attribute to the termination of transfer pricing. Khartsyzk Pipe reported an average selling price of USD 1,379/ton in 9M14, which is closer to market reality, compared to average of USD 490/ton, reported in 9M13. This didn’t create the conditions to fully counterbalance operating hurdles, however, that were faced in 3Q14.



Metinvest, the parent company of Khartsyzk Pipe, reported in mid-October that the tube producer managed to partially fix its logistics problems and is restarting production. Khartsyzk Pipe has been a regular dividend payer before it ceased to distribute them in 2013. We don’t think Khartsyzk Pipe will distribute dividends next year either, even if its output recovers in 4Q14 – orders for large diameter pipes market have been quite volatile recently, and the warfare is only increasing the uncertainty.

Источник: Конкорд Капитал

Аналитик: Роман Тополюк


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