Despite major political and economic turmoil, Centravis results for the first six months of the year are encouraging. We are, in particular, pleased to note that implementation of the long term business strategy makes good progress.
In line with our strategy and the 2014 budget, sales volumes increased by 11% to close to almost 12 000 tons. Order intake was strong, resulting in an end-June record backlog of orders (+40% y-o-y).
EBITDA increased by 84%, in HY1/2014, and was thus significantly above budget. The EBITDA margin increased from 13% to 23%. This most positive result is due to volume increase, stable exchange rates for both EUR and RUB, and significant cost reductions following the 50% devaluation of the Ukrainian local currency (UAH) in late February.
HY1 CapEx was rather low, as most projects are scheduled to be started in the second half of the year only. Net working capital remained under tight control, and inventory volumes were reduced.
HY1/2014 meant the beginning of repayments to lending banks. As a result the net debt/EBITDA ratio improved substantially, from 4.9 to 3.2.
The Company managed to restructure or to arrive at basic understandings for the restructuring of most of its financial debt. As a result, major parts of total debt repayment are shifted to 2016 and later years. Based on current EBITDA levels and assuming a more stable financial and political situation in the country, we expect to be able to draw on new facilities as early as in 2015.
Sales volumes for HY2/2014 are expected at current levels, as we continue to experience good order intake. EBITDA levels are likely to remain high. Most risk relates to the Russian market where future developments cannot be predicted. Still, despite all uncertainties, the outlook for HY2/2014 remains positive.
The Centravis Board will perform a comprehensive review of the Company’s objectives and strategies later this year. Its results will guide the Company over the next few years.
Nikopol, August 18, 2014
Peter Kratz, Chairman
Yuriy Atanasov, CEO
