On June 19 Aeroflot released its consolidated financials for FY 2007. Revenue rose 27% y-o-y to USD 3.8 billion and EBITDA surged 49% to USD 723 million. Net profit increased by 21% to USD 313 million. During 2007, the company saw its operating margin widen to 15.2% and its net margin marginally narrow to 8.2%.
Table 1. Aeroflot: Predictive and actual financial results, USD mn
| | 2006A | 2007A | 2007F | 2007A/
2006 |
|---|
| Revenue | 2992.3 | 3807.8 | 3859.0 | 27% |
| EBITDA | 483.8 | 723 | 766.0 | 49% |
| EBITDA margin | 16.2% | 19.0% | | +2.8% |
| EBIT | 386.2 | 578 | 656.0 | 50% |
| Operating margin | 12.9% | 15.2% | | +2.3% |
| Net profit | 258.1 | 313.4 | 347.3 | 21% |
| Net margin | 8.6% | 8.2% | | -0.4% |
Source: company data, Finam estimates:
Aeroflot posted hefty gains in all of its key financial indices for 2007. However, the company's revenues slightly missed our expectations. The main factors that negatively affected the company's operation included a sharp rise in personnel expenses and growing jet fuel costs. The management expects the company's net profit to decline in 2008. The main reason is sky-high prices on aviation kerosene.
The released financials generally met our expectations, except for net profit, which appeared to be discouragingly low. Exorbitant prices of jet fuel will remain a serious risk factor for Aeroflot in 2008. What is more, the carrier's determination to expand into European markets does not quite agree with minority shareholders' interests. Our fair price of Aeroflot common shares is now under review.
0.569
0.073
