Severstal-car: good results of 2006Results of 2006
this week the Severstal-car presented annual results for the past year which exceeded expectations of analyzers of Bank of Moscow. According to the financial record granted Severstal-car 2006 became one more successful year for the company. The sales volume in 2006 grew on 31 % to $1,23 billion Experts expected more modest rate of increase of a revenue - on 22 %. Parametre EBITDA in 2006$162 million (+27 %), and net profit reached $67 million Under forecasts of specialists $148 million and $79 million accordingly. Michael Ljamin, the analyzer of Bank of Moscow , separately marks profitability preserving on EBITDA on enough high level of 13,2 %.
the Main contribution to growth of financial parametres was introduced by increase in sales of automobile business (+43 %). For a year the company increased the realisation of goods actuating both cars of own production, and sale of imported cars, at 48 %. Sales of the assembly sets delivered for assembly on other enterprises, last year were shrank more than in 4 times. Nevertheless, drop of volumes of realisation of complete sets significantly did not affect general result of a segment because of a low share of given goods in a revenue total volume. Analyzers mark also that reduction of sales of assembly sets was expected as earlier company management already reported about unprofitableness of sales of given goods in view of what its volume of output will be reduced.
following the results of a year the volume of realisation of an automobile segment Severstal-car constituted $797 million On structure of the sold cars it is possible to mark confident growth of sales UAZ Patriot. Last year the company implemented over 10,1 thousand cars of the given brand (+120 %). Also the result of sales of commercial cars UAZ which unlike their expectations, showed a small gain became unexpectedness for experts. On this background, the share of sales of own brands in 2006 decreased less significantly, than specialists assumed earlier.
Nevertheless, profitability of a segment following the results of a year all the same decreased. The main contribution to growth of consumptions in 2006 was introduced by the operational costs, consolidated ZMA. Also the increase in commercial consumptions called by raise of the advertising budget, haul costs of cars and payment of bonuses to dealers became the large component which has affected drop of profitability. On the other hand, it is possible to mark carrying out of successful personnel selection in which result there was a personnel reduction, with simultaneous raise of salaries to the remained personnel, labour productivity thereby was increased, and the payment fund was practically saved at former level.
Growth of sales of a propulsion segment last year constituted 14 %. Here the main contribution to parametre growth was introduced by expansion of sales of more expensive goods (engines of level EURO 2), and also growth of sales of running spares. The last of analytics did not consider earlier in model that was reflected in look-ahead parametres of a segment.
production parametres following the results of a year also presented a number of pleasant surprises. Earlier experts expected reduction in demand for propulsion goods, as at the expense of reduction of the intraformation consumption, and reduction of sales on the party. Nevertheless, contrary to expectations in quantitative expression of sale decreased slightly (-1,6 %). The group GAZ - the main consumer of propulsion goods, last year accumulated purchases of engines ZMZ on 2,5 % though earlier the group planed to reduce the purchases. There was no reduction of consumption and from UAZ which as already it was marked above, last year managed to keep sales volumes of own goods at former level.
the large investment projects which are conducted by the company last years were reflected in monetary flows. In 2006 monetary flows Severstal-car were shrank, nevertheless, remained in a positive plane that allowed the company to finance the activity basically at the expense of internal sources. As a result, following the results of a year the pure debt of the company was increased slightly - from $73 to $83 million
Raise of forecasts
Being based on results of the company for 2006, analyzers of Bank of Moscow conducted a revision of financial model avtomobilestroitelnogo holding Severstal-car. First of all changes mentioned three next years.
Apparently from the fetched table, former estimations on the company have been increased, first of all, from the point of view of profitability - experts expect that transition to full-scale assembly, growth of sales and an exit to a total power of the started projects will positively be reflected in profitability of the company in the future . However, considering the shrunk volume of output of own cars and raise of a role of import components in the assembly, significant growth of parametres of analytics do not expect.
forecasts on a revenue are increased slightly . And, basically experts changed sales volume in 2007-2008 that in many respects speaks a revision of rates of drop of sales of commercial cars UAZ and engines. Remaining components of a revolution have been revised to a lesser degree. However analyzers mark that in the estimation not completely consider perspective developments of projects of the company, negotiations on which starting are led now. In particular, creation of the joint venture with Isuzu on assembly of auto trucks and creation of own dealer network. According to specialists, both projects are perspective and bear considerable profits to the company. The joint project with Isuzu increases congestion of powers of UAZ freed as a result of drop of production of becoming outdated models. Besides, with goods Isuzu the Severstal-car enters the perspective market of commercial engineering with the modelling gamma covering the most part of segments of the market. Building of own dealer network allows the company not only more carefully to organise sale, but also to attract the additional income of service of cars. However particular parametres of both projects while are not present that does not allow experts to reflect expectation on realisation of the given projects in model.
On the basis of changes of forecasts of analytics of Bank of Moscow conducted a revision of fair value of shares of company. Experts value fair value of shares of company at level of $42,55 that on 31 % above current market price. Thus, they exhibit the advisory to take shares Severstal-car .