Motor Sich improves P&L in 1H20

Ukraine’s leading aeronautics producer Motor Sich
(MSICH UK) reported a 16% yoy increase in net revenue to UAH 4,739 mln in 1H20.
Its EBITDA surged 14x yoy to UAH 1,529 mln and its bottom line turned to
positive UAH 593 mln in 1H20, from negative UAH 426 mln a year before. The
company’s net debt climbed 11% YTD to UAH 1,918 mln as of end-June. Management
said in its quarterly report it has optimized its activity to focus on the
projects that are paying back in the short term. It also reported that the
terms of international trade were supportive for the company in 2Q20.

In 2Q20, Motor Sich’s improved revenue by 36% yoy (and
30% qoq) to UAH 2,683 mln and generated UAH 814 mln of net profit (vs. losses
of over UAH 200 mln in both 1Q20 and 2Q19).

Alexander Paraschiy: The boosted
1H20 revenue – which allowed the company to benefit from high operating
leverage – coupled with some cost-cutting measures enabled the firm to improve
significantly its operating profit. At the same time, the stronger hryvnia in
2Q20 allowed the company to reduce costs related to debt revaluation (most of
its debt is denominated in foreign currency).

Overall, it’s positive to see the company improve
its fundamentals despite an ongoing conflict about its ownership, in which
Chinese and American interests are involved. Meanwhile, the company’s shares
remain banned from trading, with unclear prospects of resolving the issue.