REG-HMS Group HMS Group Reports 6m 2020 EBITDA of Rub 2.1 billion
08/10/2020 08:00
============
HMS Group (HMSG)
HMS Group Reports 6m 2020 EBITDA of Rub 2.1 billion
08-Oct-2020 / 10:00 MSK
Dissemination of a Regulatory Announcement, transmitted by EQS Group.
The issuer is solely responsible for the content of this announcement.
══════════════════════════════════════════════════════════════════════════
HMS Group Reports 6m 2020 EBITDA of Rub 2.1 billion
Moscow, Russia - October 08, 2020 - HMS Group Plc (the "Group") (LSE:
HMSG), the leading pump, oil & gas equipment and compressor manufacturer
and provider of flow control solutions and related services in Russia and
the CIS, today announces its financial results for the six months ended
June 30, 2020.
Financial highlights 6m 2020:
• Revenue: Rub 19.5 bn (-17% yoy)
• EBITDA 1 1 : Rub 2.1 bn (+8% yoy), EBITDA margin at 10.8%
• Operating profit: Rub 524 mn (-13% yoy)
• Loss for the period: Rub 314 mn
• Total debt: Rub 22.8 bn (+14% yoy)
• Net debt: Rub 16.2 bn (+4% yoy)
• Net debt-to-EBITDA LTM ratio: 3.25x
Operational highlights 6m 2020:
• Backlog: Rub 55.0 bn (+27% yoy)
• Order intake: Rub 30.4 bn (+24% yoy)
FY 2020 Guidance:
• Revenue: Rub 50-55 bn
• EBITDA: Rub 4.7-5 bn
• Current operating results don't imply net income for FY2020
• It's unlikely that HMS will pay dividends for FY2020, taking into
account expected annual results and aggregate macroeconomic risks
GROUP PERFORMANCE
6 months 2020 financial Results
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Orders 30,398 24,541 24% 7,256 23,142 -69%
Backlog 55,023 43,412 27% 55,023 58,720 -6%
Revenue 19,498 23,419 -17% 10,383 9,115 14%
EBITDA 2,107 1,953 8% 1,030 1,077 -4%
EBITDA margin 10.8% 8.3% 9.9% 11.8%
Loss for the period (314) (178) na (161) (153) na
Free cash (1,513) (1,918) -21% (3,604) 2,091 -272%
flow/(outflow)
Order intake grew to Rub 30.4 billion, by 24% yoy, compared with Rub 24.5
billion for 6 months 2019, due to a large Rub 11.2 billion compressor
contract signed in the reporting period.
Backlog also grew to Rub 55.0 billion, by 27% yoy, compared with Rub 43.4
billion last year. All main business segments demonstrated growth,
especially the compressors. In terms of contracts type, both the
recurring business and large contracts grew, compared with 6m 2019.
Revenue declined to Rub 19.5 billion, by 17%, compared with Rub 23.4
billion for 6 months 2019, mainly due to a decrease of the compressors
business segment.
EBITDA was up to Rub 2.1 billion, by 8% yoy, compared with Rub 2.0 billion
due to the recovery of the oil & gas equipment and projects business
segment.
Revenue from recurring business declined by 9% yoy, and revenue from large
projects was down by 34% yoy. EBITDA from recurring business increased by
39% yoy, and from large projects was down by 18% yoy.
EBITDA margin was up to 10.8%, compared with 8.3% for 6 months 2019.
Loss for 6 months 2020 was Rub 314 million, compared with loss for the
period at Rub 178 million for 6 months 2019.
Free cash outflow was Rub 1.5 billion, compared with Rub 1.9 billion
outflow for 6 months 2019, despite lower revenue, compared with 6 months
2019, due to a cost-optimization program.
Expenses and Operating profit
in millions of Rub 6m 2020 6m 2019 Change yoy Share of 6m Share of 6m
2020 revenue 2019 revenue
Cost of sales 15,537 18,989 -18% 79.7% 81.1%
Materials and 9,703 13,414 -28% 49.8% 57.3%
components
Labour costs incl 3,524 3,592 -2% 18.1% 15.3%
Social taxes
Depreciation and 1,048 946 11% 5.4% 4.0%
amortization
Construction and 1,065 938 14% 5.5% 4.0%
design 2 2
Others 197 100 96% 1.0% 0.4%
Cost of sales was down to Rub 15.5 billion by 18% yoy, compared with Rub
19.0 billion for 6 months 2019, due to materials and components (-28%
yoy), which decrease was correlated with lower revenue as well as with a
less share of large contracts under execution in the reporting period.
Gross profit was down to Rub 4.0 billion, by 11% yoy, compared with Rub
4.4 billion for 6 months 2019.
in millions of Rub 6m 2020 6m 2019 Change yoy Share of 6m Share of 6m
2020 revenue 2019 revenue
Gross profit 3,961 4,429 -11% 20.3% 18.9%
Distribution and 906 951 -5% 4.6% 4.1%
transportation
General and 2,405 2,753 -13% 12.3% 11.8%
administrative
SG&A expenses 3,311 3,704 -11% 17.0% 15.8%
Other operating 127 123 3% 0.6% 0.5%
expenses
Operating expenses 3,437 3,827 -10% 17.6% 16.3%
ex. Cost of sales
Operating profit 524 602 -13% 2.7% 2.6%
Finance costs 941 838 12% 4.8% 3.6%
Distribution and transportation expenses was down by 5% yoy. As a share
of revenue, distribution and transportation expenses was up to 4.6%,
compared with 4.1% last year.
General and administrative expenses were down by 13% yoy to Rub 2.4
billion, compared with Rub 2.8 billion last year, mainly due to the
decrease in labor costs and related social taxes (-16% yoy). As a share
of revenue, general and administrative expenses were up to 12.3% from
11.8% for 6 months 2019.
SG&A expenses 3 3 declined by 11% yoy, due to the implemented
cost-optimization program. As a share of revenue they were up to 17.0%,
compared with 15.8% for 6 months 2019.
Operating profit declined to Rub 524 million, compared with operating
profit of Rub 602 million for 6 months 2019.
in millions of Rub 6m 2020 6m 2019 Change yoy
Finance costs 941 838 12%
Interest expenses 933 827 13%
Interest rate, average 8.21% 8.78%
Interest rate Rub, average 8.33% 8.93%
Finance costs were up to Rub 941 million, compared with Rub 838 million
for 6 months 2019, due to the increase of interest expenses (+13% yoy)
because of a higher level of total debt (+14% yoy). Average rates
decreased to 8.21% p.a., compared with 8.78% p.a. last year.
BUSINESS SEGMENTS PERFORMANCE
Industrial pumps 4 i
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Orders 8,015 10,572 -24% 3,499 4,515 -22%
Backlog 19,685 19,398 1% 19,685 20,961 -6%
Revenue 8,288 7,980 4% 4,594 3,693 24%
EBITDA 1,019 1,068 -5% 545 474 15%
EBITDA margin 12.3% 13.4% 11.9% 12.8%
Order intake of industrial pumps declined by 24% yoy to Rub 8.0 billion,
compared with Rub 10.6 billion for 6 months 2019. Less orders were signed
in the reporting period due to the postponement of some tenders to the 2nd
half of 2020 because of the COVID-19.
Backlog grew by a minor 1% yoy to Rub 19.7 billion, compared with Rub 19.4
billion for 6 months 2019, based on the recurring business.
Revenue was Rub 8.3 billion, up by 4% yoy, compared with Rub 8.0 billion
for 6 months 2019. The growth was based on both recurring business and
large contracts.
EBITDA declined to Rub 1.0 billion, by 5% yoy, compared with Rub 1.1
billion for 6 months 2019, due to a large share of recurring business in
the reporting period, that has a lower profitability. Also, deliveries on
a number of nuclear pump contracts were postponed to the 2nd half of 2020
and the 2021 year due to the COVID-19.
EBITDA margin was 12.3%, compared with 13.4% for 6 months 2019.
Oil and Gas equipment & projects (OGEP) 5 ii
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Orders 6,723 6,686 1% 1,789 4,934 -64%
Backlog 8,282 7,550 10% 8,282 8,517 -3%
Revenue 5,154 5,934 -13% 2,078 3,076 -32%
EBITDA 243 -250 na -111 354 na
EBITDA margin 4.7% -4.2% -5.3% 11.5%
Order intake grew to Rub 6.7 billion, by 1% yoy.
Backlog was up by 10% yoy to Rub 8.3 billion, compared with Rub 7.6
billion for 6 months 2019, due to a large contract signed in 2Q 2020.
Revenue declined to Rub 5.2 billion, by 13% yoy, compared with Rub 5.9
billion for 6 months 2019. EBITDA was up to Rub 243 million, compared
with Rub (250) million, and EBITDA margin was 4.7% vs. (4.2)% for 6 months
2019, fully thanks to the recovery of recurring business. Deliveries and
execution on a number of large projects were postponed to the 2nd half of
2020 and the 2021 year because of a suspension of production at clients'
and vendors' facilities due to the COVID-19.
Compressors 6 iii
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Orders 15,451 7,177 115% 1,961 13,490 -85%
Backlog 26,366 14,854 78% 26,366 28,409 -7%
Revenue 5,793 8,938 -35% 3,599 2,194 64%
EBITDA 653 835 -22% 432 221 96%
EBITDA margin 11.3% 9.3% 12.0% 10.1%
Order intake was up 115% yoy to Rub 15.5 billion, compared with Rub 7.2
billion, because of a large Rub 10.2 billion compressor contract signed in
1Q 2020.
Backlog increased by 78% yoy to Rub 26.4 billion, compared with Rub 14.9
billion last year. The growth was based on both the recurring business and
large contracts.
Revenue was down by 35% yoy to Rub 5.8 billion, compared with Rub 8.9
billion, and EBITDA declined by 22% yoy to Rub 653 million, compared with
Rub 835 million, due to less revenue and EBITDA generated by large
contracts.
EBITDA margin was up to 11.3%, compared with 9.3% for 6 months 2019.
Construction 7 iv
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Orders 210 105 99% 7 203 -97%
Backlog 690 1,610 -57% 690 834 -17%
Revenue 406 695 -42% 169 237 -29%
EBITDA 39 15 153% 17 23 -27%
EBITDA margin 9.6% 2.2% 9.8% 9.5%
Order intake equaled Rub 210 million. Backlog was down to Rub 690 million.
Revenue was down to Rub 406 million, compared with Rub 695 million for 6
months 2019. EBITDA was Rub 39 million, compared with Rub 15 million last
year.
Working capital and Capital expenditures
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Working capital 10,486 9,508 10% 10,486 7,019 49%
Working capital / 22.1% 17.1% 22.1% 13.6%
Revenue LTM
Capex 743 800 -7% 408 334 22%
Acquisition 0 670 - -
Working capital increased to Rub 10.5 billion, by 10% yoy, compared with
Rub 9.5 billion for 6 months 2019, due to a quarterly volatility, related
to execution of large contracts, compiled with payment terms pressure from
clients. As a share of revenue, working capital was up to 22.1%, compared
with 17.1% for 6 months 2019.
Capital expenditures decreased to Rub 743 million, by 7% yoy, compared
with Rub 800 million last year.
DEBT POSITION
in millions of Rub 6m 2020 6m 2019 Change yoy 2Q 2020 1Q 2020 Change qoq
Total debt 22,752 19,988 14% 22,752 21,501 6%
Net debt 16,177 15,628 4% 16,177 12,228 32%
Net debt / EBITDA 3.25 2.97 3.25 2.26
LTM
Total debt increased to Rub 22.8 billion, by 14% yoy, compared with Rub
20.0 billion for 6 months 2019. Net debt grew to Rub 16.2 billion, by 4%
yoy, compared with Rub 15.6 billion for 6 months 2019.
Net debt to EBITDA LTM ratio increased to 3.25x compared with 2.97x for 6
months 2019.
SIGNIFICANT EVENTS AFTER THE REPORTING DATE & FINANCIAL MANAGEMENT
FINANCIAL MANAGEMENT
After the reporting date, in July 2020, HMS Group successfully placed Rub
3 billion 8.15 percent coupon exchange bonds issue of JSC
"HYDROMASHSERVICE", one of the company's operational subsidiaries. On
October 2, 2020, the Group placed one more Rub 3 billion exchange bonds
issue of JSC "HYDROMASHSERVICE" with 7.95 percent coupon. Alongside with
the bonds placements, the company prolonged Rub 2.1 billion attracted from
Raiffeisenbank to the 2022 year.
As the result of these actions, HMS refinanced Rub 7.6 billion in total
and shifted debt payments from 2021-2022 to 2022-2023.
HMS' debt repayment schedule, Rub mn 2020 2021 2022 2,023
Debt to be repaid 233 1,155 14,459 6,650
LARGE CONTRACTS
After the reporting date, HMS announced the signature of two contracts
worth Rub 1 billion in total to deliver pumps - one contract was for
petrochemicals, and the other - for marine application.
In August 2020, HMS signed a Rub 3.8 billion contract within a long-term
framework agreement to manufacture mobile compressor units. The framework
agreement was signed in 2019.
Also, in August 2020, the company announced the signature of a Rub 4.5
billion contract to engineer and manufacture gas compression units to be
installed at a client's gas booster station in 2021.
In September 2020, HMS Group announced the signature of Rub 1.9 billion
contract to engineer and manufacture gas transportation units to be
delivered by the end of 2021.
CREDIT RATINGS
In July 2020, Fitch Ratings affirmed JSC HMS Group's Foreign- and
Local-Currency Issuer Default Ratings (IDR)s of "B+", the outlook
"Stable". The rating reflects HMS' "forecast sustainable operating
performance supported by the healthy order book, leading market position,
strong customer base, comfortable liquidity and an expected gradual oil
price recovery in the medium term."
DIVIDENDS
The final dividends in respect of FY2019 in the amount of Rub 3.41 per one
ordinary share (i.e. Rub 17.05 per one depositary receipt) were paid on
June 30, 2020, to shareholders on HMS' register at close of business (UK
time) on June 19, 2020.
***
DUE TO THE SITUATION WITH THE COVID-19, HMS GROUP WILL NOT HOLD THE
WEBCAST
Contacts:
Inna Kelekhsaeva, Deputy Head of Capital markets, email: 8 ir@hms.ru
***
HMS Group is the leading pump and compressor manufacturer, as well as
provider of flow control solutions and related services to the oil and
gas, nuclear and thermal power generation and water utilities sectors in
Russia and the CIS. HMS Group's products are mission-critical elements of
projects across a diverse range of industries. It has participated in a
number of large-scale infrastructure projects in Russia, including
providing pumps and modular equipment to the Vankor oil field and pumping
stations on recent trunk pipelines projects linking Russia's core oil
producing areas to export ports on the Pacific Ocean and Baltic Sea. HMS
Group's global depositary receipts ("GDRs") are listed under the symbol
"HMSG" on the London Stock Exchange.
Press Release Information Accuracy Disclaimer
Information published in press releases was accurate at the time of
publication but may be superseded by subsequent releases or other
information.
LEI: 254900DDFETNLASV8M53
══════════════════════════════════════════════════════════════════════════
9 1 EBITDA is defined as operating profit/(loss) adjusted for other
operating income/expenses, depreciation and amortisation, amortisation of
government grants, impairment of assets, excess of fair value of net
assets acquired over the cost of acquisition, defined benefits scheme
expense and provisions (including provision for obsolete inventory, ECL
allowance and provision for impairment of trade and other receivables and
other financial assets, unused vacation allowance, warranty provision,
provision for legal claims, tax provision and other provisions). This
measurement basis, therefore, excludes the effects of a number of
non-recurring income and expenses on the results of the operating
segments.
10 2 Construction and design and engineering services of subcontractors
11 3 SG&A expenses - Selling, General and Administrative Expenses,
compiled of distribution & transportation expenses plus general &
administrative ones
══════════════════════════════════════════════════════════════════════════
12 i The industrial pumps business segment designs, engineers,
manufactures and supplies a diverse range of pumps and pump-based
integrated solutions to customers in the oil and gas, power generation and
water utilities sectors in Russia, the CIS and internationally. The
business segment's principal products include customized pumps and
integrated solutions as well as pumps built to standard specifications; it
also provides aftermarket maintenance and repair services and other
support for its products.
13 ii The oil and gas equipment and projects business segment
manufactures, installs and commissions modular pumping stations, automated
metering equipment, oil, gas and water processing and preparation units
and other equipment and systems for use primarily in oil extraction and
transportation. The segment's core products are equipment packages and
systems installed inside a self-contained, free-standing structure which
can be transported on trailers and delivered to and installed on the
customer's site as a modular but fully integrated part of the customer's
technological process.
14 iii The compressors business segment designs, engineers,
manufactures and supplies a diverse range of compressors and
compressor-based solutions, including compressor units and compressor
stations, to customers in the oil and gas, metals and mining and other
basic industries in Russia. The business segment's principal products
include customized compressors, series-produced compressors built to
standard specifications, and compressor-based integrated solutions.
15 iv The construction provides construction works for projects for
customers in the oil upstream and midstream, gas upstream.
══════════════════════════════════════════════════════════════════════════
ISIN: US40425X4079
Category Code: IR
TIDM: HMSG
LEI Code: 254900DDFETNLASV8M53
OAM Categories: 1.2. Half yearly financial reports and audit
reports/limited reviews
Sequence No.: 85576
EQS News ID: 1139569
End of Announcement EQS News Service
══════════════════════════════════════════════════════════════════════════
16 fncls.ssp?fn=show_t_gif&application_id=1139569&application_name=news&site_id=reuters8
References
Visible links
1. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ftn1
2. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ftn2
3. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ftn3
4. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_edn1
5. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_edn2
6. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_edn3
7. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_edn4
8. mailto:ir@hms.ru?subject=Re%20conf%20call
9. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ftnref1
10. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ftnref2
11. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ftnref3
12. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ednref1
13. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ednref2
14. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ednref3
15. file:///data/ucdp/tmp/xhtmlconvert_parsn_eqs_8DOanoqz.html#_ednref4
============Recent news on HMS Hydraulic Machines & Systems
See all newsREG - Stock Exch Notice - N06/22 - Russia related sanctions - Update
AnnouncementREG-HMS Group HMS Group GDRs Admitted to Trading on the Moscow Exchange
AnnouncementREG-HMS Group HMS Group: Annual Report 2020
AnnouncementREG-HMS Group HMS Group Reports FY 2020 EBITDA of Rub 4.9 billion
AnnouncementREG-HMS Group HMS Group Schedules FY 2020 Earnings Release and Conference Call
Announcement