TMM cuts sales 2x, losses 4x yoy in 1H12

TMM Real Estate (TR61 GR) halved its revenue to USD 14.3 mln in 1H12, on a 3.1x decline in sales of real estate property to USD 5.5 mln, the company reported in its unaudited financials yesterday. The company explained the decrease by the fact that most new property sales were made in its Sonyachna Brama-2 residential project, and TMM does not recognize revenues from its sales until the project is completed. Earlier the company said the project would be commissioned by yearend. The company stressed increased revenue from the provision of construction and engineering services to third parties in 1H12 (up almost 5x yoy to USD 5.0 mln). EBITDA turned positive at USD 2.2 mln (vs. negative USD 1.7 mln in 1H11), and net losses were cut 3.6x yoy to USD 3.2 mln in 1H12. Operating cash flow before interest paid turned negative at USD 2.9 mln (vs. positive USD 1.6 mln a year ago). Net debt increased by USD 12 mln to USD 143 mln in 1H12, as the company attracted new loans to finance the completion of Sonyachna Brama-2, bringing up net debt/equity ratio at 0.90x from 0.82x in end-2011.

Alexander Paraschiy: From the company’s financials, we found no proof of TMM’s statement that it is actively pre-selling properties in its flagship Sonyachna Brama-2: advances received were down USD 8.8 mln YTD in 1H12 and operating cash flow was negative. We hope the project’s completion will allow the company to improve revenues in 2012-2013 and partially decrease its leverage.