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GAZ posted stronger headline financial indicators in 2006 compared to 2005 which underscores dynamic rollout of the company’s business and upbeat prospects for GAZ shares.
On June 6, GAZ released its FY06 IAS consolidated financials which enables us to draw some conclusions about the operations of the entire group as a whole. In 2006, the company posted robust growth: revenue climbed 25.6%, sales profit advanced 33.2% and net profit nearly doubled, up 94.4%. Topline growth and stronger profit are attributable to the company’s expanded operations as a result of market growth.
In 2006, the company managed to improve margins due to efficient cost-containment measures. However, FY06 margins are modest: EBITDA margin was 10.96% and net profit margin only amounted to 12.3%. It’s noteworthy that 9M06 margin was 12.3%. Margin softened in Q4 due to new products launched on the market and consolidation of the loss-making LCV plant. The fact that administrative and selling expenses grew 36.3% and 28.7%, respectively, could raise concerns. Meanwhile, we believe that the main reason behind this growth is the group’s ongoing restructuring which is a non-recurring development and will not produce any impact on the company’s future cash flows.
Table 1. Headline financial indicators
| | | 2006 | 2005 | Chng |
| Revenue |
Rub bln |
118.8 |
94.6 |
25.60% |
| Gross profit |
Rub bln |
23.2 |
17.4 |
33.47% |
| Gross profit margin |
% |
19.56% |
18.41% |
+ 1.15% |
| Sales profit |
Rub bln |
11.14 |
8.36 |
33.2% |
| Sales profit margin |
% |
9.38% |
8.84% |
+0.53% |
| EBIT |
Rub bln |
10.20 |
6.95 |
46.83% |
| EBIT margin |
% |
8.58% |
7.34% |
+ 1.24% |
| EBITDA |
Rub bln |
13.02 |
9.70 |
34.27% |
| EBITDA margin |
% |
10.96% |
10.25% |
+ 0.71% |
| Net profit |
Rub bln |
6.00 |
3.09 |
94.46% |
| Net profit margin |
% |
5.05% |
3.26% |
+ 1.79% |
Source: Company data, Finam estimates
We are in the process of revising our recommendation on GAZ shares.
Konstantin Romanov
Other comments of the day
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GAZ
Capitalization: $192 158 353,80
Common shares:
Price: $9,63
Delta week: 0,00%
Delta month: -27,4%
Delta year: -94,3%
Preferred shares:
Price: $9,50
Delta week: 0,00%
Delta month: -26,9%
Delta year: -92,0%
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0.244
0.616
