Motor Sich net profit plunges 43% yoy in 1Q13

Motor Sich’s (MSICH UK) net profit plunged 43% yoy to UAH 321 mln in 1Q12, the company reported on April 26. Revenue grew 25% yoy to UAH 1.9 bln while COGS surged 55% yoy, sending the company’s gross profit sliding 4.4% yoy to UAH 726 mln. EDITDA fell 29.8% yoy to UAH 444 mln for the period with an EBITDA margin of 23%.

Roman Dmytrenko: The company’s profitability drop is partially a result of 16% yoy (UAH 207 mln) growth in its “other operational expenses” item, which is most likely a one-off expense. What’s more concerning is the 11pp decline in the company’s gross margin, which might indicate that Motor Sich started losing control over its costs in pursuing double-digit revenue growth. Newertheless, we remain bullish on Motor Sich, which retains its status of one of the fastest growing aerospace companies globally.