Muskita Aluminium Industries Pcl (MAI.CY) issued its 1Q08 results posting a 1.9% YoY decrease in net profit to EUR 3.1 mln. Despite the containment in operating expenses (lower unit cost), the lower profitability is attributed primarily to lower European export sales (-25.2% YoY).
The company reported a 1.4% decrease in revenue to EUR 16.9mln. The decrease in revenue mainly reflects the 25.2% YoY decrease in revenue from the company’s sales in Europe (exports from Cyprus and sales from MAI’s UK-based subsidiary Universal Components) to EUR 5.3mln. Despite the company’s strategic priority to enhance its competitiveness and further penetrate the European market, the sales of the UK-based Universal Components have been negatively affected in 1Q 2008 from factors such as the economic slowdown in the UK and the ongoing weakness of sterling against the euro.
On the other hand, revenue from MAI’s operations in the domestic market reported a 15.4% increase to EUR 11.6mln, mainly reflecting the strong ongoing activity in the local construction market (despite signs of a slowdown). With an estimated domestic market share of around 75%, MAI is the only company in Cyprus to produce aluminium profiles, which are primarily used in the construction industry.
At the profitability level, gross profit in 1Q08 declined marginally by 1.4% YoY to EUR 5.3mln, with gross profit margin being maintained at the same level (31.2%). EBITDA advanced by 1.7% to EUR 4.3 mln with margins improving by 80bps from 24.4% to 25.2% in 1Q08.
Sharelink forecasts
Sharelink Securities and Finance Services are maintaining their share price target on MAI at EUR 1.50 per share. For 2008 Sharelink currently project revenue of EUR67.6 mln, down from EUR68.9 mln previously. Domestic sales are currently forecasted at EUR 45.1mln (previously: EUR 43.7m), sales in Europe at EUR 22.1mln (previously: EUR 24.7m) and sales in other countries at EUR 0.5mln.
Based on the current conditions and the exchange rate between the euro, sterling and the US dollar, Sharelink is forecasting profit after tax at EUR 11.5 mln, very close to its previous EUR 11.7 mln forecast.
