Operating performance


  • Backlog increased by 23% yoy to 27.5 billion rubles vs. 22.3 billion rubles, while order intake stayed almost flat year-on-year at 34.7 billion rubles, driven by a steady demand despite downturn and economic uncertainty
  • Revenue of 32.4 billion rubles stayed unchanged in comparison with 2013
  • EBITDA1 totaled 5.3 billion rubles, up 1% yoy; EBITDA margin was 16.3% compared to 16.2% in 2013
  • Operating profit dropped by 80% yoy to 0.9 billion rubles with operating margin at 2.6% versus 12.9% last year
  • Operating profit adj., if exclude all non-monetary adjustments2, was flat at 3.8 billion rubles and operating margin decreased to 11.6% versus 11.8% last year
  • Profit for the year was negative 1.6 billion rubles, down from positive 1.2 billion rubles
  • Profit for the year adj., if exclude write-offs, grew by 55% yoy to 1.2 billion rubles from 0.8 billion rubles last year
  • Total debt grew by 34% yoy to 17.0 billion rubles from 12.7 billion rubles
  • Net debt increased by 12% yoy to 12.4 billion rubles resulting in Net debt-to-EBITDA ratio of 2.36x compared to 2.12x last year
  • Return on capital employed (ROCE) adj.3 was 11.1% versus 13.9% in the previous year. If taken without any adjustments, then ROCE dropped to 3.1% compared to 15.8% in 2013


Backlog and order intake

As of December 31, 2014, the Group built its backlog at 27,510 million rubles, up 23% yoy on the back of growth in pumps and oil & gas equipment which demonstrated positive dynamics in the reporting period.

In the pump business segment, the backlog grew by 25% yoy to 11,076 million rubles mainly because of increased inflow of standard equipment orders, where backlog of pumps for export outside Russia grew to 3,641 million rubles.

Backlog grew by 47% yoy in the oil & gas equipment business segment both in large contracts and standard equipment, and achieved 11,610 million rubles as of 31 December 2014.

The compressors dropped by 7% yoy to 2,131 million rubles mainly due to postponements of several large projects to 2015. But in accordance with the methodology backlog by segments is composed without intersegment sales to exclude duplications. Therefore, when considering the compressors business segment as a stand-alone, it should be increased by intragroup sales by more than 1.0 billion rubles so it totals more than 3.1 billion rubles, supporting substantial increase of KKM’s revenue and EBITDA in 2015.

The EPC segment’s backlog showed negative dynamics with decline by 18% yoy to 2,693 million rubles as a result of delay of some new projects in the project and design (EP) sub-segment due to uncertainties in the economy. At the same time, the backlog of the construction (C) sub-segment grew by 37% yoy.

Backlog, Rub mn 2013 FY 2014 FY Change yoy
Industrial pumps 8,867 11,076 25%
Oil & Gas equipment 7,873 11,610 47%
Compressors 2,289 2,131 -7%
EPC 3,304 2,693 -18%
Construction 1,218 1,671 37%
Engineering 2,086 1,022 -51%
Total 22,333 27,510 +23%
Excel download

Order intake4 in 2014 equaled 34.7 billion rubles and remained almost the same as in 2013. The decrease in consolidated orders for compressors and project and design (EP) was compensated for by growth of orders in all other business segments.

Order intake, Rub mn 2013 FY 2014 FY Change yoy
Industrial pumps 13,935 15,592 12%
Oil & gas equipment 11,809 13,963 18%
Compressors 3,947 2,168 -45%
EPC 5,123 2,983 -42%
 Construction 1,316 1,559 18%
 Engineering 3,807 1,424 -63%
Total 34,814 34,705 0%
Excel download


HMS’ revenue amounted to 32,351 million rubles, almost the same as in 2013. EBITDA grew by 1% yoy to 5,272 million rubles. As a result, EBITDA margin for 12 months 2014 stayed almost unchanged at 16.3% versus 16.2% last year.

Financial highlights, Rub mn 2013 FY 2014 FY Change yoy
Revenue 32,358 32,531 0%
EBITDA 5,238 5,272 1%
EBITDA margin 16.2% 16.3%  
Excel download

The Group’s cost of sales, which traditionally accounts for about 70-73% of total revenue, grew by 1% yoy from 23,373 million rubles to 23,511 million rubles, driven mainly by growth of supplies and raw materials and labor costs. Combined contribution to the cost of sales from its key components - supplies and raw materials and cost of goods sold – accounted for 41% share of revenue in 2014, the same as in 2013.

Cost of sales, Rub mn 2013 FY % of revenue 2014 FY % of revenue Change yoy
Total cost of sales 23,373 72% 23,511 73% 1%
Supplies and raw materials 10,567 33% 11,238 35% 9%
Labour costs 5,489 17% 5,677 18% 3%
Cost of goods sold 2,799 9% 2,162 7% -23%
Other expenses 4,518 19% 4,434 14% -2%
Excel download

Labour costs grew by 3% yoy to 5,677 million rubles from 5,489 million rubles.

Operating expenses,
Rub mn
2013 FY% of revenue 2014 FY % of revenue Change yoy
Distribution and transportation1,3524% 1,237 4% -9%
General and administrative3,86012% 4,340 13% 12%
Other operating expenses1100.3% 222 0.7% 102%
Finance costs1,7415% 2,148 7% 23%
Excel download

Distribution and transportation expenses in absolute terms were down by 9% yoy to 1,237 million rubles in 2014. As a percentage of revenue, they comprised 4% in both periods.

General and administrative expenses totaled 4,340 million rubles for 2014, up 12% yoy, mainly because of 5% yoy growth in labour costs and change in provision for accounts receivable.

Operating profit dropped 80% yoy and totaled 855 million rubles versus 4,179 million rubles in 2013. Operating margin stood at 2.6%. In 2013, the Group posted 439 million rubles impairment of the construction business and 955 million rubles extra gain from the bargain M&A, which contributed 516 million rubles to HMS’ operating profit. On the contrary, in 2014 the Group recognized 2,186 million rubles impairment of goodwill, which reflected geopolitical risks and worsened economic conditions in Russia.

If adjusted, the Group’s operating profit stayed almost flat at 3,761 million rubles with operating margin adjusted sliding to 11.6% from 11.8%.

Operating profit reconciliation,
Rub mn
2013 FY 2014 FY Change yoy
Operating profit 4,179 855 -80%
Excess of fair value of net assets acquired
over the cost of acquisition
-955 0  
Impairment of assets on construction business,
other than goodwill
422 0  
Impairment of goodwill 17 2,186  
Foreign exchange loss from borrowings,
net (from Finance costs)
160 720  
Operating profit, adj. 3,823 3,761 -2%
Excel download

The main factor of finance costs 23% yoy growth was a foreign exchange loss, that increased by 351% yoy from 160 million rubles to 720 million rubles for 12 months 2014 primarily due to Euro 26 million loan of HMS Neftemash, attracted for acquisition of Apollo Goessnitz GmbH (Apollo), and an intragroup loan nominated in rubles but transferred in UAH – which together generated 93% of this loss.

Interest expenses decreased by 7% yoy to 1,413 million rubles compared to 1,522 million rubles in 2013 and comprised 4.4% share of total revenue versus 4.7% in the previous year.

Profit for the year adjusted increased by 55% yoy to 1,187 million rubles from 768 million rubles. But if reconciled by one-off non-monetary impairment of goodwill and the effect of foreign exchange loss from borrowings, then loss for the period reached 1,575 million rubles versus profit for the period of 1,156 million rubles last year.

Net income reconciliation,
Rub mn
2013 FY 2014 FY Change yoy
Profit/(Loss) for the year 1,156 -1,575 -147%
Excess of fair value of net assets acquired
over the cost of acquisition
-955 0  
Impairment of assets on construction business,
other than goodwill
422 0  
Impairment of goodwill 17 2,186  
Foreign exchange loss from borrowings,
net of 20% income tax
128 576  
Profit for the year, adj. 768 1,187 32%
Excel download
Impairment of goodwill in 2014

On Dec 31, 2014, the Group performed impairment test of goodwill and concluded that of goodwill of KKM, GTNG and IRVKP had to be impaired:

  • Kazankompressormash (KKM) – The impairment of 1,003 million rubles resulted primarily from adjustment in discount rate, reflecting recent changes in Russian economic environment
  • Giprotyumenneftegaz (GTNG) – The impairment of 1,111 million rubles resulted primarily from changes in the future growth and profitability assumptions in order to bring them in line with expected market developments, past performance of the business and from adjustment in discount rate, reflecting recent changes in Russian economy
  • Institute Rostovsky Vodokanalproekt (IRVKP) – The full impairment of goodwill of 73 million rubles due to changes of the future growth and profitability assumptions and adjustment in discount rate


Industrial pumps business segment

The industrial pumps business segment designs, engineers, manufactures and supplies a diverse range of pumps and pump-based integrated solutions to customers in the oil and gas, power generation and water utilities sectors in Russia, the CIS and internationally. The business segment’s principal products include customized pumps and integrated solution as well as pumps built to standard specifications; it also provides aftermarket maintenance and repair services and other support for its products.

Industrial pumps, Rub mn 2013 FY 2014 FY Change yoy
Revenue 18,386 16,270 -12%
EBITDA 3,801 3,137 -17%
EBITDA margin 20.7% 19.3%  
Excel download

The industrial pumps business segment’s revenue declined by 12% yoy to 16,270 million rubles from 18,386 million rubles in 2013, while EBITDA dropped by 17% yoy to 3,137 million rubles. EBITDA margin stayed at 19.3% which is higher than average though lower than 20.7% last year.

Stable inflow of small and mid-size orders for standard pumps generated comparable revenue and EBITDA, and large projects earned less revenue and EBITDA in 2014 than in 2013.

Oil & gas equipment business segment

The oil & gas equipment business segment manufactures, installs and commissions modular pumping stations, automated metering equipment, oil, gas and water processing and preparation units and other equipment and systems for use primarily in oil extraction and transportation. The segment’s core products are equipment packages and systems installed inside a self-contained, free-standing structure which can be transported on trailers and delivered to and installed on the customer’s site as a modular but fully integrated part of the customer’s technological process.

OG equipment, Rub mn 2013 FY 2014 FY Change yoy
Revenue 6,972 10,220 47%
EBITDA 929 1,908 105%
EBITDA margin 13.3% 18.7%  
Excel download

Revenue in the oil & gas equipment business segment demonstrated the 1.5 times sharp growth to 10,220 million rubles and EBITDA grew twofold to 1,908 million rubles despite later than expected start of large-scale projects execution and less orders for standard equipment.

Revenue and EBITDA from standard orders decreased in comparison with the previous year because HMS Neftemash, the main production facility in the oil & gas business segment, reduced its activity in standard production to utilize capacities for large projects execution.

As a result of increased share of integrated solutions, EBITDA margin reached 18.7% versus 13.3% last year.

Compressors business segment

The compressors business segment designs, engineers, manufactures and supplies a diverse range of compressors and compressor-based solutions, including compressor units and compressor stations, to customers in the oil and gas, metals and mining and other basic industries in Russia. The business segment’s principal products include customized compressors, series-produced compressors built to standard specifications, and compressor-based integrated solutions.

Compressors, Rub mn 2013 FY 2014 FY Change yoy
Revenue 4,207 2,474 -41%
EBITDA 572 -255 n/a
EBITDA margin 13.6% -10.3%  
Excel download

Revenue dropped by 41% yoy to 2,474 million rubles and EBITDA turned negative 255 million rubles in comparison to positive 572 million rubles in 2013. The poor results of the compressors business segment are explained by the postponements of some targeted large tenders and the adjusted schedule of one large project coordinated with a customer due to delay by the client’s another subcontractor, located in Donetsk, Ukraine, caused by objective reasons, resulted in insufficient revenue to compensate a constant level of fixed costs.

However, the postponement of this large contract will have positive influence on 2015 results.

The company launched the operational efficiency improvement program to partly compensate the abovementioned delays, and we expect to have more visible results in 2015.

HMS Group expects the compressors business segment to generate better results in 2015, based on the strong already built backlog with a larger share of integrated solutions in orders portfolio.

Engineering, procurement and construction (EPC) business segment

The engineering, procurement and construction (EPC) business segment provides design and engineering services, project management and construction works for projects for customers in the oil upstream and midstream, gas upstream and water utilities sectors.

EPC, Rub mn 2013 FY 2014 FY Change yoy
Revenue EPC 2,788 3,355 20%
   Project and Design 2,189 2,266 4%
   Construction 599 1,089 82%
EBITDA EPC -235 490 -309%
   Project and Design 230 279 22%
   Construction -465 211 n/a
EBITDA margin EPC -8.4% 14.6%  
   Project and Design 10.5% 12.3%  
   Construction -77.6% 19.3%  
Excel download

The EPC business segment delivered better results in 2014 compared to 2013 with revenue growing by 20% yoy to 3,355 million rubles and EBITDA turning positive to 490 million rubles after business restructuring and cost cutting program implementation in 2013-2014.

Both the project and design sub-segment and the construction sub-segment experienced a growth in profitability in the reporting period, but the latter demonstrated more impressive financial performance in comparison to the previous year.

As a result, the EPC segment’s EBITDA margin turned positive and reached 14.6%, versus -8.4% in 2013

[1] EBITDA is defined as operating profit/loss from continuing operations adjusted for other operating income/expenses, depreciation and amortisation, impairment of assets, excess of fair value of net assets acquired over the cost of acquisition, defined benefits scheme expense and provisions (including provision for obsolete inventory, provision for impairment of accounts receivable, unused vacation allowance, warranty provision, provision for legal claims, tax provision and other provisions). This measurement basis, therefore, excludes the effects of a number of non-recurring income and expenses on the results of the operating segments.
[2] Non-monetary adjustments are derived as significant one-off non-cash items including impairment of goodwill, impairment of assets, excess of fair value of net assets acquired over the cost of acquisition, and foreign exchange loss from borrowings.
[3] ROCE adj. is calculated as EBIT divided by (average total debt + average equity), and ROCE is calculated as Operating profit from Consolidated statement of Profit or Loss, divided by (average total debt + average equity).
[4] Under management accounts

If you have any questions - just send us a message in the form below


Moscow, Chayanova st., 7, Russia

Tel.: +7 495 730 6601

Fax: +7 495 730 6602

E-mail: info@hms.ru

Investor Relations

E-mail: ir@hms.ru

send message

My Annual Report

Your page has been added successfully.