EuroElTech: revenue grows, but profit and cash flow diverge

On August 31, EuroElTech released its results for the first half of 2026. Revenue grew 46.9% year on year to RUB 4,850.7 million, but net profit fell 14.6% to RUB 120.8 million. The report shows that growth was driven by the engineering systems segment, while margins contracted due to operating expenses and finance costs.

Key takeaways

— Revenue +46.9% driven by the engineering systems segment, which grew 42.6%

— EBITDA rose only 2.0%: margin contracted from 11.7% to 8.1%

— Operating profit barely changed despite revenue adding RUB 1.5 billion

— Net profit fell 14.6% due to higher finance costs of RUB 170.7 million

— Operating cash flow turned negative at RUB -1,317.9 million due to outflows in advances and payables

— Debt rose by RUB 1.7 billion over six months to RUB 392.4 million, with net debt/EBITDA at 0.37

— Dividends over 12 months at RUB 0.85 per share, yield 11.4%, above our fair yield of 7.0%

Key figures, RUB bn

Revenue +46.9% driven by the engineering systems segment, which grew 42.6%

For the first half of 2026, EuroElTech's revenue reached RUB 4,850.7 million, up 46.9% year on year. The main contribution came from the Engineering Systems segment – its revenue grew 42.6% to RUB 3,842.9 million. The Technological Systems segment added 65.7% to RUB 1,007.7 million, but its share of total revenue remains below a quarter.

The report notes that one largest customer accounted for 34% of revenue (RUB 1,635.9 million) – a notable increase in concentration from 25% a year earlier. Such dependence on a single client raises sensitivity to their procurement cycles.

EBITDA rose only 2.0%: margin contracted from 11.7% to 8.1%

Despite revenue growing 46.9%, EBITDA for the half-year increased only 2.0% to RUB 394.8 million (per segment report). EBITDA margin fell from 11.7% to 8.1%. This means that revenue growth barely converted into operating results.

The main reason lies in the cost structure: cost of sales rose 47.4% (to RUB 3,934.2 million), selling expenses more than doubled (to RUB 237.6 million), and administrative expenses grew 39.2% (to RUB 308.4 million). As a result, operating profit remained almost flat year on year – RUB 317.3 million versus RUB 310.9 million.

Operating profit barely changed despite revenue adding RUB 1.5 billion

For the first half of 2026, operating profit was RUB 317.3 million – just 2.0% higher than a year earlier. Meanwhile, revenue grew by RUB 1,548.1 million. This divergence is explained by the fact that almost all revenue growth was absorbed by higher cost of sales and selling expenses.

The report also shows other operating loss of RUB 53.2 million versus income of RUB 14.1 million a year earlier. This further compressed the operating result, although its nature is not disclosed in the report.

Net profit fell 14.6% due to higher finance costs of RUB 170.7 million

Net profit for the first half of 2026 was RUB 120.8 million, down 14.6% year on year. Pressure came from finance costs, which rose from RUB 149.9 million to RUB 170.7 million – partly related to raising loans and borrowings, including from the parent company.

Finance income grew from RUB 20.1 million to RUB 27.3 million, but did not offset the increase in expenses. As a result, net margin fell from 4.3% to 2.5%.

Operating cash flow turned negative at RUB -1,317.9 million due to outflows in advances and payables

Operating cash flow for the first half of 2026 was minus RUB 1,317.9 million versus plus RUB 74.4 million a year earlier. The main outflows were changes in advances received (minus RUB 1,179.5 million) and accounts payable (minus RUB 434.6 million).

At the same time, the company increased inventories by RUB 121.7 million and accounts receivable by RUB 493.1 million. As a result, operating cash flow not only failed to cover investments but also required debt financing.

Debt rose by RUB 1.7 billion over six months to RUB 392.4 million, with net debt/EBITDA at 0.37

Net debt as of June 30, 2026 stood at RUB 392.4 million versus minus RUB 306.1 million at the end of 2023 (per Q4 2023 data). Over the last 12 months, debt increased by RUB 1.2 billion. Net debt to EBITDA for the last 12 months is 0.37.

The debt increase is related to raising loans and borrowings of RUB 3,639.0 million and issuing digital financial assets of RUB 200.0 million, partially offset by repayments of RUB 2,464.6 million. The company also paid dividends of RUB 134.5 million for the half-year.

Dividends over 12 months at RUB 0.85 per share, yield 11.4%, above our fair yield of 7.0%

Over the last 12 months, the company paid dividends of RUB 0.85 per share, implying a yield of 11.4% at the current price. Our model estimates a fair yield for this name at 7.0%, so the current yield is notably higher.

Based on trailing twelve-month profit of RUB 811.6 million, the payout ratio is 0.43. This means the company allocates less than half of profit to dividends, retaining resources for investments and debt service.

Valuation on the latest reported figures

Bottom line

EuroElTech showed strong revenue growth, but it did not convert into profit: EBITDA and operating profit barely changed, while net profit declined. Operating cash flow turned deeply negative, requiring increased debt. At the same time, the dividend yield remains high at 11.4%, which supports the shares. The key question for a holder is whether the company can restore margins and cash flow, or whether the current growth model requires constant external financing.