International Human Resource Management

In: Business and Management

Submitted By harischandra
Words 13583
Pages 55
│ CREDIT RESEARCH │

Wednesday │ 20 September │ 2006
Summary Financials (USD mn)
2003 Sales Gross Profit EBITDA Net Profit Fin Debt Equity Operating CF Free CF 160.3 32.8 14.8 8.4 9.7 43.4 12.3 (2.9) 2004 204.7 69.2 47.4 29.9 16.9 82.4 7.7 (11.3) 2005 249.7 82.8 52.1 30.9 50.7 96.3 21.1 2006E 279.6 94.0 61.0 34.8 153.9 129.2 45.4

No. 1 in the Russian ball bearing industry
European Bearing Corporation (EBC) controls 37% of the Russian ball bearing market. EBC operates five ball bearing plants in Russia and one in Kazakhstan and produces more than 2,700 types of ball bearings for more than 500 customers. EBC controls 98% of Russia’s high-precision (aviation) ball bearing market and 95% of the railroad ball bearing market. These two business segments accounted for 65% of EBC’s revenues in 2005.

Long-term relationship with Russian Railroads
The company has a supply contract worth USD560 mn with Russian Railroads that secures EBC average annual revenue of USD100 mn to 2010.

(23.2) 19.3 Source: Company data 2004 34% 23% 15% 0.4 35.0 2005 33% 21% 12% 0.9 13.7

Ratios
2003 Gross Margin EBITDA Margin Net Margin Debt/EBITDA EBITDA/Int. Expense Financial Debt/Equity 20% 9% 5% 0.7 22.8 0.22

Solid financial standing, moderate leverage
In 2005, EBC reported revenues of USD250mn, up 22% y-o-y. EBITDA margin stood at 21%, while the debt/EBITDA ratio was only 0.9. Factoring in the planned CLN issue, debt/EBITDA should not exceed 2.5 at year-end 2006, and gradually decline thereafter.

0.20 0.53 Source: Company data 2007E 2.1 5.5 1.08 2008E 1.8 5.8 2009E 1.4 6.7

Forecast ratios, conservative base case
2006E Debt/EBITDA EBITDA/Int. Expense Financial Debt/Equity 2.5 6.7 1.19

Adequate level of transparency and disclosure
EBC has been preparing IFRS financials since 2004. Since its ruble bond issue in 2005, the company has complied with all necessary…...

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