Druzhkivka Machinery’s Revenues Up 76.5% yoy in 2007

Druzhkivka Machinery (DRMZ: BUY) reported that its net revenue surged by 76.5% yoy to USD 151.0 mln in 2007. Its EBITDA rose by 85% yoy to USD 14.0 mln (EBITDA margin of 9.3%) and net income increased by 2.2x yoy to USD 5.1 mln (net margin of 3.4%). Inna Perepelytsya: The company’s reported sales were 15% higher than we expected (USD 131.0 mln), while EBITDA was 25% lower than our forecasts (USD 18.7 mln). We believe lower profitability was a result of failing to fully pass on rapidly increasing steel prices to consumers. We maintain our 2008 forecasts (EBITDA of USD 23.6 mln, net income of USD 14.9 mln), as in our view the company will succeed in lifting the end cost of its products this year.