OREANDA-NEWS. August 3, 2011. Protek released its 1H11 operating data today (3 Aug). Revenue was up a moderate 4.5% YoY in rouble terms driven mainly by retail segment growth of 19.5% YoY, while distribution segment revenue was flat vs 1H10 with a 2.7% decline in 2Q11. The good news is that the structure of distribution revenue changed substantially towards the commercial segment which added 4% YoY, while sales in the low-margin budget segment were down 18% YoY. This should support Protek’s profitability.

Retail segment revenue was up 19.5% YoY mainly driven by traffic growth as well as price increases.

Production segment revenue lost 11.7% in 2Q11 vs 2Q10, but Protek suffered the loss for the greater good: as of 2Q11, the share of company brands in the production portfolio had nearly doubled YoY, reaching 25%. This should fuel Protek’s production division margins.

Bottom line

We are concerned about Protek’s sluggish revenue growth but the change in revenue structure should lead to profitability improvements in 2011 vs last year. Nevertheless, the results are unlikely to trigger any positive moves in the name in the near term.