Belon posts 48% decrease in FY07 IFRS net income

Belon has reported strong headline financial indicators for 2007. Revenue rose 29%, net income decreased 48% and EBITDA doubled. In our opinion, the company remains an appealing investment option and we retain our Buy recommendation

Belon Group saw a 48% decline in IFRS net income to Rb 659 mln (some $27 mln), the company’s Deputy CEO Evgeny Gaysler said yesterday.

According to him, the contraction in net income is only attributable to net asset revaluation. The current net income figure is given exclusively in cash, while the 2006 metric was calculated in non-monetary terms. 

FY07 net income was also impacted by higher costs due to higher borrowings intended to finance the investment program, Gaysler noted. He went on to say that last year the company allocated about $220 mln to finance the investment program (not including VAT) in 2007 vs. $130-140 mln in 2006. The bulk of investments ($213 mln) will go to the coal segment, he pointed out.

Revenue soared 29% to Rb 13,557 mln (some $552 mln). The company’s gross profit advanced 52.2% to Rb 3,302 mln (some $134.5 mln). Gross profit growth along with a marginal increase in SG&A enabled the company to double EBITDA to Rb 2,390 mln ($97.4 mln).