Egis reported its first fiscal quarter (1Q07/06) results this morning. IFRS consolidated net profit came in at HUF 1.67bn (down 73.9% y/y and 32.7% q/q) and 5.5% above our forecast of HUF 1.59bn. The non-consolidated figure came 2% below the indication the company gave in its profit warning two weeks ago. We expect slightly negative market reaction to this report, as we see there was nothing new under the sun, but a slightly lower gross margin. We see management’s full year guidance will be more of a price driving factor today.
Domestic sales came at HUF 13.6bn (down 14.1% y/y and up 2.2% q/q), 3.3% below our estimate as we have slightly underestimated the impact of wholesalers postponing their purchases to 2007.
CIS sales were depressed in line with Egis indication in its profit warning. The company reported US$ 27.8m CIS sales (down 5.0% y/y and 16.7% q/q), slightly above our estimate of US$ 26.3m. Russian DLO sales came at US$0.4m (down 87.1% y/y and 77.8% q/q), US$ 0.9m lower than our estimate as we have underestimated the cautiousness of Egis’ sales policy (i.e. Egis reduced its sales in response to an increase in turnover days of receivables). Russian private market sales also showed unimpressive y/y growth of 6.5%. We see management’s guidance on 2007 outlook later today as a crucial price driver.