PJSC Evropeyskaya Elektrotekhnica boosted its revenue by 26.6 % and doubled its profit (as per IFRS) in 2018
PJSC Evropeyskaya Elektrotekhnica boosted its revenue by 26.6 % and doubled its profit (as per IFRS) in 2018
May 16, 2019. Moscow — PJSC Evropeyskaya Elektrotekhnica, a leading company in the Russian engineering market, announces its audited consolidated financial results as per IFRS for 2018.
The Company published a combined report following the results from 2017. For the first time, the Company managed to switch to publishing consolidated financial statements in accordance with international standards after completing the consolidation of assets held by subsidiaries in the PJSC Evropeyskaya Elektrotekhnica balance sheet in 2018.
The amount of consolidated revenue in the reporting period rose to RUB 3,286.7 million or 26.6 % compared to 2017, and profit increased by 117.5 % to a total of RUB 293.1 million. EBITDA reached RUB 382.3 million; its profitability was 11.6 %.
Key indicators:
In RUB million, unless otherwise specified |
2018 |
2017 |
Change, % |
Consolidated revenue |
3,286.7 |
2,595.3 |
+26.6 % |
Gross profit |
796.3 |
467.9 |
+70.2 % |
Gross profit margin |
24.2 % |
18.0 % |
+6.2 p.p. |
Operating profit |
370.5 |
306.9 |
+20.7 % |
Operating profit margin |
11.3 % |
11.8 % |
-0.5 p.p. |
EBITDA [1] |
382.3 |
361.3 |
+5.8 % |
EBITDA margin |
11.6 % |
13.9 % |
-2.3 p.p. |
Profit for the period |
293.1 |
134.7 |
+117.5 % |
Profit margin for the period |
8.9 % |
5.2 % |
+3.7 p.p. |
|
|
|
|
Investment [2] |
407.0 |
226.4 |
a factor of 1.8 times |
Investment in R&D [2] |
165.0 |
30.0 |
a factor of 5.5 times |
Free cash flow to equity (FCFE) [2] |
49,129 |
-42,458 |
- |
Return on equity (ROE) |
47.4 % |
35.7 % |
+11.8 p.p. |
Dividends paid |
91.9 |
6.9 |
a factor of 12.3 times |
|
|
|
|
|
December 31, 2018 |
December 31, 2017 |
Change, % |
Assets |
1,291.2 |
1,154.9 |
+11.8 % |
Cash and cash equivalents |
246.8 |
209.8 |
+17.6 % |
Equity/Assets |
53.8 % |
46.9 % |
+6.9 p.p. |
Net working capital [2] |
715.4 |
565.8 |
+26.4 % |
Current ratio |
2.6 |
2.2 |
+0.4 |
Net debt [1] |
-153.1 |
-120.3 |
- |
Net debt/EBITDA |
-0.40 |
-0.33 |
- |
Source: PJSC Evropeyskaya Elektrotekhnica audited consolidated financial statements for 2018.
Notes:
[1] Non-IFRS indicators, the calculation procedure is given below in this press release
[2] Non-IFRS indicators
Statement from Management
Sergey Dubenok, Chairman of the Board of Directors of PJSC Evropeyskaya Elektrotekhnica, commented on the results shown: “The Company publishes successful financial results for 2018. Our business is growing, and so is our profitability. The profit margin for the period increased to 8.9 % (5.2 % the previous year), whilst return on equity (ROE) reached 47.4 % (35.7 % in 2017).
The results achieved in the reporting year are proof of our ability to monetize market opportunities which arise amid ongoing and high-level investment activities in Russia and neighboring countries, along with the revival and construction of new infrastructure in the face of import substitution, digitalization and large-scale investment programs implemented in a number of economic sectors. We keep close track of new sources of large-scale demand for engineering and tech equipment in our country and swiftly respond to newly emerging opportunities.
Among the most prominent internal factors of this growth, I would like to highlight that our focus is on finding the most attractive commercial business opportunities, advancing the R&D program in all key directions of the Company's operation, and successfully launching our subsidiary ROG-Engineering, which produces equipment for the Oil&Gas and petrochemical industries. We are gradually expending our exports of engineering and technical equipment and related services to Central Asia, the Middle East, North Africa, the Persian Gulf, and South-East Asia. The Company's disciplined financial policy is another very important factor that ensures the independence of our business strategy and financial stability, even amid sharp fluctuations in the business environment.
We continue to demonstrate positive financial results without borrowing from creditors outside Evropeyskaya Elektrotekhnica Group of Companies. In October 2018, the Russian credit rating agency ACRA assigned the Company a credit rating for the very first time. In February 2019, ACRA upgraded the Company's rating to the BBB- (RU) investment level with a stable outlook.”
Factors of change in the Company's key financial indicators
Consolidated revenue
The Company's consolidated revenue amounted to RUB 3,286.7 million, which is 26.6 % more than in 2017. In the revenue structure, export deliveries accounted for 11 %.
Structure of consolidated revenue according to the results of the reporting period:
-
Income from creating engineering systems and operating engineering centers in the electrotechnical market accounted for 93.0 %;
-
Income from equipment manufacturing for the Oil&Gas and petrochemical industries accounted for 7.0 %.
The largest share of the Group's contracts (in terms of delivery costs) in recent years has been for customers from the Oil&Gas complex. A comparable share of deliveries came from companies operating in the chemical and food industry:
Key factors of consolidated revenue growth:
-
The physical volume of output increased by 48 % in 2018, reflecting the ongoing investment boom in the Russian manufacturing industry and construction of infrastructure;
-
The Company expanded its network of engineering centers in Russia to 16. The new centers have been established in Tyumen, Lipetsk, and Nefteyugansk; the Company has strengthened its efforts to find new business opportunities in the Republic of Azerbaijan and Morocco;
-
As of the end of 2018, the Group was implementing 497 projects and working with customers through its own engineering centers, thus ensuring proximity to the projects being implemented.
Following the results of the reporting year, there was an increase in the diversification of revenue structure; the share of income received from the Company's two largest customers dropped to 20 % (23 % the previous year).
Cost of Sales and Gross Profit
The cost of sales amounted to RUB 2,490.3 million in the reporting period. The growth rate of production cost (+17.1 %) was significantly lower than the revenue growth rate (+26.6 %), which made a significant contribution to the Company's business profitability.
Gross profit reached RUB 796.3 million, which is an increase of 70.2 % y-o-y. Gross profit margin rose by 6.2 p.p. to 24.2 % thanks to effective measures taken by the Company to control the cost of sales.
Administrative and Selling Expenses
RUB mln |
2018 |
2017 |
Change, % |
Wages and social contributions |
164.9 |
77.7 |
+112.2 % |
Transport services |
53.0 |
29.1 |
+82.2 % |
Information services |
41.5 |
18.1 |
+128.6 % |
Materials and office supplies |
36.2 |
18.4 |
+96.7 % |
Consulting and legal services |
29.1 |
13.7 |
+112.9 % |
Business trips |
20.1 |
15.9 |
+26.6 % |
Operating lease |
16.4 |
8.5 |
+93.0 % |
Electrical installation works |
16.1 |
38.0 |
-57.6 % |
Depreciation charges |
9.5 |
15.0 |
-36.7 % |
Repair and maintenance |
3.8 |
1.7 |
+115.0 % |
Communication |
3.7 |
3.2 |
+17.9 % |
Bank services |
2.3 |
3.2 |
-28.8 % |
Insurance |
1.6 |
6.0 |
-73.1 % |
Marketing services |
0.5 |
0.7 |
-34.9 % |
Security |
0.3 |
0.3 |
+7.6 % |
Taxes |
0.3 |
0.3 |
-15.0 % |
Storage |
0.1 |
0 |
- |
Other expenses |
22.8 |
18.5 |
+23.3 % |
Total administrative and selling expenses |
422.1 |
268.4 |
+57.3 % |
The growth in expenses on wages and social contributions (+112.2 %) and information services (+128.6 %) in the reporting year was due to the launch of the subsidiary company ROG-Engineering, which produces equipment for the Oil&Gas and petrochemical industries. This was accompanied by the Group's expansion and the formation of a professional team in Bashkortostan, as well as the intensification of marketing efforts to promote technological equipment in Russia, neighboring countries, and countries in the Middle East, the Persian Gulf and North Africa.
Operating profit
The Company's operating profit grew by 20.7 % to RUB 370.5 million. Profitability on operating profit decreased slightly to 11.3 % (11.8 % in 2017).
The growth rate of operating profit was affected by higher administrative and selling expenses and a decline in other income.
The decline in other income in the reporting year was due to the Company receiving a one-off income in the amount of RUB 74.2 million from transactions with securities in 2017 (non-speculative transactions).
EBITDA
RUB mln |
2018 |
2017 |
Change, % |
Operating profit |
370.5 |
306.9 |
+20.7 % |
Depreciation of fixed and intangible assets |
11.8 |
15.0 |
-21.5 % |
Revaluation of fixed assets |
|
39.4 |
- |
EBITDA |
382.3 |
361.3 |
+5.8 % |
EBITDA margin |
11.6 % |
13.9 % |
-2.3 p.p. |
EBITDA reached RUB 382.3 million (+5.8 % y-o-y). Marginality of this indicator fell to 11.6 % in the reporting period (13.9 % in 2017).
Profit Before Tax
Profit before tax was 2.1 times higher and totaled RUB 359.0 million.
The reduction in financial expenses by 86.4 % to RUB 23.2 million was due to the restructuring of borrowings carried out during the reporting period and improvement in the conditions of their use, consisting of a reduction in interest rates and simultaneous increase in maturity.
Profit for the period
At the end of 2018, the Company's earnings grew by RUB 293.1 million, which is 2.1 times more than in 2017, and profitability significantly increased from 5.2 % the previous year to 8.9 %.
The Company's return on equity (ROE) saw a significant increase to 47.4 % (35.7 % in 2017).
Dividends
As a result of the Group's activities in 2017, the Company paid dividends in the amount of RUB 91.9 million. This was 12.3 times higher than the amount of dividends paid a year before.
Free Cash Flow
RUB mln |
2018 |
2017 |
Change, % |
Free cash flow to equity (FCFE) |
49.1 |
-42.5 |
- |
Free cash flow to the firm (FCFF) |
46.1 |
91.6 |
-49.6 % |
The amount of free cash flow at the end of 2018 was positive. The profitability of the Company's usual business aimed at creating engineering systems was not the only reason for free cash flow to raise, but also the cash flows which began to be generated by the subsidiary ROG-Engineering, which specializes in production of equipment for the Oil&Gas and petrochemical industries.
The amount of free cash flow is positive even despite the Company's investments in the establishment of the subsidiary's working capital during the first half of 2018, as well as in the ongoing investment and R&D programs. ROG-Engineering's growing operating revenues will contribute more and more to the consolidated financial result of PJSC Evropeyskaya Elektrotekhnica in 2019 and in the future.
Net Debt
RUB mln |
December 31, 2018 |
December 31, 2017 |
Total borrowings |
93.7 |
89.5 |
After deduction of cash funds and their equivalents |
246.8 |
209.8 |
Net Debt |
-153.1 |
-120.3 |
Net debt/EBITDA |
-0.40 |
-0.33 |
The Company's net debt remains negative. As of December 31, 2018, this indicator was RUB -153.1 million, which means that the amount of cash funds and their equivalents exceeds the amount of borrowings on the Company's balance sheet. As of the reporting date, PJSC Evropeyskaya Elektrotekhnica had no debt to external creditors not affiliated with Evropeyskaya Elektrotekhnica Group of Companies.
As of the end of 2018, the amount of cash and cash equivalents increased by RUB 37.0 million, even taking into account the financial investments required to launch ROG-Engineering and continue with the Group's investment program.
About Evropeyskaya Elektrotekhnica Group of Companies
• Evropeyskaya Elektrotekhnica Group of Companies (MOEX: EELT) offers comprehensive solutions in the field of engineering and technological systems for industrial, construction and infrastructural purposes: low and medium voltage distribution equipment, low current systems, lighting systems, industrial electric heating systems and equipment for the Oil&Gas and petrochemical industries.
• As a Russian joint-stock company with high corporate governance standards and financial sustainability, the Company's Mission is to improve people's quality of life with its entrepreneurial vigour and engineering competencies.
• The Company was founded in 2004 and unites a distribution center, engineering departments, an electrical laboratory and specialized production facilities. The company is one of the largest electrical equipment distributors in the Russian Federation and an industrial partner of leading companies on the international engineering market.
• The Company's logistics capabilities include delivery (including non-standard and oversize load) to customers throughout Russia, including hard-to-reach Northern areas, as well as to Central Asia, North Africa and the Middle East.
• The Company has its own production of the following equipment:
-
Complete transformer substations;
-
Medium voltage units;
-
Low voltage panels of up to 6,300A (including metro solutions);
-
Electric lighting systems;
-
Industrial electric heating systems;
-
Cabling and wiring products.
• Areas of application of the Company's competences:
-
Oil&Gas industry;
-
Electric power sector;
-
Peaceful atom,
-
Steel and mining industry;
-
Engineering;
-
Transport infrastructure, water supply and sanitation.
• Evropeyskaya Elektrotekhnica's customers include major Russian companies: Rosneft, Gazprom, NOVATEK, LUKOIL, Sibur and Nizhnekamskneftekhim. Supplies were successfully implemented for the following projects: Power of Siberia, Yamal LNG, Smolensk NPP, Data Center of Sberbank of Russia, the Domodedovo, Sheremetyevo, and Pulkovo Airports, etc.
• New areas of Company activity starting from 2018 include development and production of the following:
-
Modular equipment for the Oil&Gas and petrochemical industries (Company subsidiary ROG-Engineering, Ufa, Republic of Bashkortostan, Russian Federation);
-
Industrial specialized solutions for metro substations (currently being consolidated into the Group's structure: Metrotonnel, Moscow, Russian Federation);
-
Industrial electric heating systems.
• Key financial indicators of PJSC Evropeyskaya Elektrotekhnica (IFRS):
|
Revenue (RUB billion) |
Profit for the period (RUB million) |
Assets (RUB billion) |
2018 |
3.29 |
293.1 |
1.29 |
2017 |
2.60 |
134.7 |
1.15 |
The personnel headcount is around 350 people. Since September 2017, common shares of PJSC Evropeyskaya Elektrotekhnica are traded on the Moscow Exchange with trading code EELT.
In June 2018, the company was named Import Substitution Leader at the Leader of Competitive Sales annual national awards, in which 450 domestic suppliers from various industries took part.
Contacts:
PJSC Evropeyskaya Elektrotekhnica
Tel.: +7 (800) 600-71-18
Mailing address: 1 Lyotchika Babushkina Street, Building 3, Moscow, 129344
Press contacts
|
Contact for investors and analysts
|
For more information, please contact:
Stanislav Martyushev
Director for Corporate Communications and Investor Relations
PJSC Evropeyskaya Elektrotekhnica
Tel. +7 (495) 660-71-18 ext. 164
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