M+S Hydraulic AD (5MH BU) reported a net loss of BGN 0.4m for 2Q09 due to sharply lower sales (-61.7% y/y) and higher depreciation charges (+21.4% y/y), which were partially offset by lower material (-70.5% y/y) and labour costs (-52.1% y/y). The firm’s EBITDA margin increased to 15.1% in 2Q09 from 13.9% in 2Q08 due to a sharp reduction in material and labour costs. M+S Hydraulic is one of the world’s leading manufacturers of hydraulic motors and steering units.
We expect the firm’s sales to deteriorate sharply in 2009 due to a dramatic deceleration in global demand for hydraulic units. The company’s sales could also be adversely affected by a weak US dollar, which will benefit US competitors. In view of the falling demand, the firm’s management intends to cut its headcount by up to 20% in 2009.