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MOSL: ANNUAL REPORT THREADBARE (ART) | MOTHERSON FY18-Rising receivables and unbilled revenues dents cash flows

ANNUAL REPORT THREADBARE (ART) | MOTHERSON FY18: Rising receivables and unbilled revenues dents cash flows

 

MSS’ FY18 annual report highlights healthy revenue growth of 33% (16% organic growth). However, PAT grew by a mere 3%, driven by a subdued performance at SMRPBV (PAT down 6%). CFO declined 14% due to increased working capital requirement on account of higher receivables of INR12.6b and an increase in unbilled revenue by INR12.7b. Notably, this is despite discounting receivables of INR32b (FY17: INR20.9b) on a non-recourse basis. In FY18, MSS restated INR17.2b of receivables (pertaining to FY17) to unbilled revenue. FCF post interest was at negative INR2.8b due to continued high capex of INR30.3b. SMRPBV is at the end of an amplified capex cycle – it has spent EUR1.2b over the past five years. Rising CWIP (20% of NW) and cash (22% of NW) weighed on RoCE, which stood at 18.6% while the  RoIC ex CWIP stood at 25.5%. Intangibles were high at INR44.4b, 35% of net worth.

 Consol. EBITDA and PAT dragged by SMRPBV: Consol. revenue grew by a healthy 33% (16% adjusting PKC in the base). However, PAT grew by just 3% due to a muted performance at SMRPBV (PAT down 6%). Consol. EBITDA margin was subdued at 9.1% due to a drag from SMP, where margin stood at a mere 6%. SMP was impacted by startup cost of EUR62m (FY17: EUR28m), which will continue until SMP Tuscaloosa commences operations (likely in 3QFY19). Nevertheless, SMP Tuscaloosa (once operational) and SMP Kecskemet (commenced operations in 1QFY19) are expected to support SMP’s growth, going forward. PKC impressed with annualized revenue growth of 21% to EUR1,027m and annualized PAT of EUR18m (CY16: EUR3m).