Hms Hydraulic S Regulatory News (HMSG)

31 Oct 2013 13:00

October 31, 2013

HMS Hydraulic Machines & Systems Group plc

(the “Company”, and together with its subsidiaries, the “HMS Group”)

HMS GROUP 3Q AND 9M 2013 ORDER INTAKE

Moscow, Russia – HMS Group (LSE: HMSG), the leading pump and compressor manufacturer as well as provider of flow control solutions and related services to the oil and gas, nuclear and thermal power generation and water utilities sectors in Russia and the CIS, today releases its order intake for third quarter and nine months of 2013.

9M 2013 HIGHLIGHTS:

Total order intake for 9M 2013 amounted Rub 22.8 bn, down 22% y-o-y In industrial pump business segment order intake, excl. large-scale contracts, totaled Rub 9.0 bn, being broadly flat y-o-y In oil and gas business segment order intake declined by 13% y-o-y to Rub 4.8 bn Compressor business segment increased its order intake by 67% y-o-y to Rub 3.4 bn Weak order inflow in construction sub-segment led to decline in order intake in EPC business segment to Rub 4.1 bn

Order intake for 3Q 2013 and the 9M 2013

(Rub, mn)

Business segments		3Q 2013		3Q 2012		Change		9М 2013		9М 2012		Change
Industrial Pumps		3,787		5,453		-31%		10,490		16,340		-36%
excl. large contracts¹		2,263		2,758		-18%		8,966		9,020		-1%
Oil and Gas equipment		1,265		1,816		-30%		4,761		5,446		-13%
Compressors		1,455		1,474		-1%		3,423		2,049		67%
EPC		613		2,112		-71%		4,089		5,393		-24%
Construction		49		1,621		-97%		1,913		4,140		-54%
Project and Design		564		491		15%		2,176		1,253		74%
TOTAL²		7,120		10,855		-34%		22,763		29,228		-22%

¹Large contracts include ESPO-2 and reconstruction of water-pumping stations in Turkmenistan contracts, signed in 2012, and Zapolyarye – Purpe contract, signed in 2013

²Totals may differ from the sum of numbers as a result of rounding

The Group’s order intake under management accounts for 9M 2013 amounted to Rub 22.8 bn, down by 22% year-on-year, while for 3Q 2013, it achieved Rub 7.1 bn, down by 34% year-on-year.

HMS’ performance was generally affected by the downward trends in Russian economy as well as slowing-down of investment activities in the Group’s core markets. Oil and gas majors postponed tenders for the Group’s key targeted projects, initially scheduled for the beginning of the year. As a result, HMS has signed only one large-scale contract for Rub 1.5 bn in 2013, while last year the Group enjoyed several material contracts, which allowed building a solid order intake. Moreover, the Group was very selective to the quality of its order intake, intentionally avoiding low-margin construction contracts and remaining focused on the development of its core businesses. On the back of such challenging conditions, the Group managed to demonstrate decent results in the reporting period, supported primarily by inflow of orders under small- and mid-size contracts.

Industrial pumps

For 9M 2013, in the industrial pumps business segment order intake declined by 36% to Rub 10.5 bn year-on-year due to high base of the previous year. Excluding large-scale contracts, the segment’s order intake was almost flat (-1% year-on-year) and amounted to Rub 9.0 bn. During 9M 2012, HMS Group has signed a contract to provide a reconstruction of 3 water-pumping stations located in Turkmenistan and ESPO-2 contract totaled Rub 7.3 bn. In the current year, the segment’s order intake was slightly supported by the agreement for production and delivery of 8 trunk pipeline pump units for two pump stations of the Zapolyarye – Purpe Oil Pipeline totaled Rub 1.5 bn.

Compared with the 3Q 2012, order intake in the industrial pump business segment contracted by 31% year-on-year to Rub 3.8 bn. Excluding large contracts, the segment’s order flow declined by 18% year-on-year due to lower volume orders for industrial pumps in the reporting period.

Oil and Gas equipment

Orders received by oil and gas equipment business segment for 9M 2013 decreased by 13% year-on-year mainly due to the completion of the large Vankor project, which supported the segment’s performance last year. Moreover, temporally delay of some projects, initially scheduled by customers for the beginning of 2013, negatively impacted the results of the segment in the reporting period.

In the oil and gas equipment business segment in 3Q 2013 order inflow declined by 30% year-on-year to Rub 1.3 bn due to lower volume of orders for modular equipment.

Compressors

Compared with 9M 2012, the compressor business segment substantially increased its order intake (by 67% year-on-year) to Rub 3.4 bn, benefiting from a number of material contracts on delivery of compressor stations and units.

In 3Q 2013, in the compressor business segment order intake was stable year-on-year at Rub 1.5 bn.

EPC

Orders received by EPC business segment dropped by 24% year-on-year to Rub 4.1 bn for 9M 2013, suffered from the performance of the construction sub-segment. Weak inflow of orders for construction business was a result of the Group’s strategy aimed at refusal from low-margin construction contracts. The other sub-segment, project and design, on the contrary, demonstrated a solid growth by 74% year-on-year.

For 3Q 2013, order intake in EPC business segment decreased by 71% due to decline in construction sub-segment in the reporting period.

Starting from Q1 2013 HMS Group provides the data split under management accounts, which corresponds with the Note “Segment Information” under IFRS accounting, compared to a split by a type of products or services we used to provide in 2012. All 2012 numbers are adjusted accordingly.

HMS Group is the leading pump and compressor manufacturer as well as provider of flow control solutions and related services to the oil and gas, nuclear and thermal power generation and water utilities sectors in Russia and the CIS. HMS Group’s products are mission-critical elements of projects across a diverse range of industries. It has participated in a number of large-scale infrastructure projects in Russia, including providing pumps and modular equipment to the Vankor oil field and pumping stations on recent trunk pipelines projects linking Russia’s core oil producing areas to export ports on the Pacific Ocean and Baltic Sea.

For further information, please contact:

Vera Timoshenko Head of IR Tel: +7 (495) 730-66-01, ext. 1302 timoshenko@hms.ru			Nozima Karimova Head of Press Service Tel: +7 (495) 730-66-10 karimova@hms.ru

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