Motor Sich reports 16% yoy EBITDA increase in 9M15

Ukraine’s leading producer of aircraft engines Motor Sich (MSICH UK) reported a 45% yoy increase in its top line to UAH 10,508 mln in 9M15, according to the company’s Oct. 24 filing. Its EBITDA improved 16% yoy to UAH 5,121 mln, and bottom line jumped 65% yoy to UAH 2,536 mln. The results imply that in 3Q15, Motor Sich posted net revenue of UAH 3,590 mln (+40% yoy, but -8% qoq), EBITDA of UAH 1,927 (-14% yoy, but +12% qoq) and net income of UAH 946 mln (+70% qoq).

Alexander Paraschiy: The company’s improved bottom line is not a surprise, given that it benefits much from devaluation of the local currency as its cycle for engine production (almost all going for export) is six to nine months. The company continued delivering its products abroad, including the Russian market, claiming its engines are not the products for military or dual-purpose use. For future periods however, the company’s fundamentals may worsen with no forthcoming positive ForEx effect and possible restrictions on selling its key products, helicopter engines, to its key market, the Russian Federation. Recall on Sept. 16, the Ukrainian president imposed sanctions against 105 Russian and Ukrainian enterprises, including Motor Sich’s key Russian partners, Salut engine maker, Helicopters of Russia, the Kazan Helicopter Plant and the Ulan-Ude Aviation Plant. Though the sanctions call for prohibiting business contracts and financial operations as well as freezing assets, the exact application of such measures and their effect on Motor Sich are not clear at the moment. Thus far, the company has yet to comment on this issue.