Atanas Bobokov, Monbat CEO

With lead prices back to normal fluctuations, Monbat returns to higher operating profitability with EBITDA margin above 18% for two consecutive quarters. Rising volumes and positive lead price developments will support the company H2 2016 performance while renewed investments in capacity expansion and new technology will drive long-term growth.

Monbat delivered 18%+ margin

After taking a hit from abnormal lead fluctuation at the end of 2015, Monbat returned to normal margins in 2016. The Company delivered healthy 18%+ EBITDA margin two consecutive quarters with 18.4% as of June 2016.
Consolidated EBITDA for H1’16 is BGN 20.9m, down 2.48% y/y, on 5% y/y decline in average LME prices, 0.9% y/y decline in sales and higher labor costs. Bottom line results are above ELANA Trading Research Department estimates while top line underperformed as the LME lost significant ground at the end of Q1 and beginning of Q2’16.

Speeding up capacity and new investments

Nice surprise in Q2 are the higher than expected CAPEX investments. Monbat is advancing on its calculated expansion in both starter and stationary batteries capacity in Dobrich and Montana with the first stage to be completed in Sept. 2016. It also initiated a EUR 9m project to expand its recycling capacity by acquiring new tin extraction technology from lead alloys. Tin has been among the biggest commodity gainers in 2016 as mining capacity problems in Asia delivered lower than expected supply. Overall, CAPEX in 2016 is expected at ~BGN 24m, as Monbat’s management said at the last shareholders’ meeting.

Read more in ELANA Trading equity research report