Muskita Aluminium profits up 3.3% in first half ‘08

Muskita Aluminium Industries Plc (MAI.CY) issued reported a mild 3.3% increase in net profit during the first half of 2008, leading Sharelink Securities & Financial Services to decrease its price target on the shares, eventhough the profitability forecast for the whole year issued by SFS is higher.
MAI revenue marginally increased 0.8% to EUR34.4mln with revenue from local aluminium sales increasing 13.8% to EUR 23.9mln and exports in Europe & other countries decreasing 20.0% to EUR 10.5mln. Gross margins in 1H 2008 were maintained at 31.0% (30.6% in 1H 2007) while EBIT margins marginally increased to 19.9% from 19.3% in the corresponding period in 2007. This was the result of operating cost
containment. ForEx gains amounted at EUR 47k in 1H 2008 compared to EUR 50k in 1H 2007 mainly driven by the weakening of the GBP against the Euro.
MAI’s BoD expects that FY2008 profitability will be as satisfactory at the level of the six-month results, but analysts are worried about the contribution of the UK-based Universal Components, which is facing an economic slowdown in the U.K and North Europe and currency swings.
Based on the current conditions and the exchange rate between the Euro, the Pound Sterling and the US dollar, Sharelink Research said its profit after tax projection for 2008 currently stands at EUR11.7mln from EUR 11.5 mln previously.
However, Sharelink said it has lowered its price target on MAI to EUR 1.45/share
from EUR 1.50/share before. “This mainly reflects our more conservative view on the Group’s earnings potential from 2009 and beyond due to the anticipated difficult economic conditions in the markets in which it operates,” note Sharelink analysts.