CEDC reports excellent results
CEDC has reported excellent results for Q3 2012 and expects to release the restated results for Q2 2012 later today. On the same note, the management has issued a press release responding to the serious criticism from the major shareholder, temporary president of CEDC and owner of RSC Mr Tariko. We reiterate our BUY recommendation.
According to the press release, Mr Tariko last week attempted to take over the control of CEDC, which the management of CEDC states as the primary reason for Mr Tariko’s accusations. We consider the press release yet another sign of the ongoing power struggle at CEDC, and there are no changes to the case. We still #$%$ that owing to Mr Tariko’s already significant commitment in CEDC, the agreement between RSC and CEDC will be signed and that a recovery of around 40%-50% will imply limited downside of the issue.
Excellent results for Q3 2012:
Revenue was down by 9.7% to USD 191m, which covers organic growth of 1% and a negative effect of 10.7% from exchange rates. Organic growth was primarily attributed to a positive development in Poland, while the development in Russia remains critical.
The gross margin rose from 37.5% in Q3 2011 to 42.9% in Q3 2012, reflecting recovery of the underlying business despite unrest.
EBITDA was up by no less than 43.7% (y/y) to USD 30m, which is the highest level since Q3 2010. This level is even including expenses of USD 11.4m, that CEDC paid in connection with the agreement with RSC and the financial restatement.
Net debt fell by 23% (y/y) to USD 948m; hence, the leverage fell to 14.3x. If CEDC succeeds in maintaining earnings at this level over the next three quarters, the leverage will again fall to the level of 6x at the end of Q2 2013.