Bogdan Motors reports 29% yoy gross profit squeeze in 1H12

Bogdan Motors (LUAZ UK) increased revenues 10% yoy to USD 224 mln in 1H12, according to financials released yesterday. Gross profit declined 29% yoy to USD 23.6 mln, with gross margin narrowing 5.6 pp yoy to 10.6% for the period, which still allowed the company to post positive EBITDA of USD 14.3 mln vs. negative USD 9.5 mln in 1H11. The company’s net loss declined 7.6x yoy to USD 3.9 mln in 1H12.

Roman Dmytrenko: The drop in the company’s gross margin correlates with the 22% yoy decline in passenger car production in 1H12 as Bogdan is struggling to sell its output on the domestic market. Revenue growth is driven mainly by exports to Russia, which currently accounts for 94% of Bogdan’s own car sales and sales of imported Hyundai cars via the company’s dealership network. We also note that the yoy growth in EBITDA is attributed to the dissolution of the one-off “other operational expenses” item, which added USD 65 mln to the company’s costs in 1H11.