With the H1 earnings season done for the Croatian blue chips, today we decided to bring you an overview of the margin development of these companies, with a focus on the EBITDA and net income margins. In general, 6 out of 9 blue chips improved their EBITDA margin, while 7 of them improved their net income margins, with growth recorded across most industries.
For the most part, the Croatian blue chips have recorded improved revenue & profitability levels in H1 2025, leading to improved margins, both on the EBITDA and net income side.
Comparison of the EBITDA margins of Croatian blue chips (H1 2025 vs. H1 2024, %)
Source: Companies’ data, InterCapital Research
We would like to note that HPB was excluded from this comparison as it is a bank and thus its P&L is structured differently and does not allow for the extraction of the EBITDA & net margins. Among the rest, the largest EBITDA margin was recorded by Hrvatski Telekom, at 39.6%, a slight 1 p.p. decline YoY, mainly as a result of slightly faster cost growth as compared to revenue growth, with employee expenses to a larger, and material expenses to a lesser effect impacting this.
Next up, we have Končar D&ST, which, along with the entire Končar Group, has recorded some of the fastest growth on the ZSE in the last couple of years. Končar D&ST recorded an EBITDA margin of 35.7%, an increase of 4.6 p.p. YoY. Končar D&ST also has a large backlog, as there is a lot of demand for the Company’s products and services in the energy and transformer segments, leading to this increase in the margin.
Following them is Podravka with an EBITDA margin of 29.6%, an increase of 12.5 p.p. YoY, mainly supported by the consolidation & gain from Fortenova’s agriculture segments, now part of Podravka Agri inside the Group, as well as good business results & growth across the most important Group segments. Končar also recorded a solid margin of 21.9%, an increase of almost 3 p.p. YoY, and like with the D&ST, which is also part of the Group, Končar as a whole has recorded very good results on the back of the demand for their products, especially in the transformer segment.
The only other 2 companies to record double-digit EBITDA margins in H1 2025 were Adris grupa, with a margin of 18.2%, remaining roughly unchanged YoY, and Ericsson NT, with a margin of 12.6%, a decline of 1.9 p.p. YoY. For Adris, the margin stability is mostly because, despite the good results of its insurance segment (Croatia osiguranje), cost growth was also recorded. At the same time, most of the accommodation offered (mainly through Maistra in this case) was either closed or operating at lower capacity. Furthermore, a lot of investments are made into camps and upgrades & new construction of hotels, also increasing costs. As a result, the margin remained stable.
On the other hand, Ericsson NT’s drop in margin can be attributed to slower revenue growth, while costs, especially employee and material costs, continued to grow. The Company also noted a slowdown in demand in the telecom industry, as well as continued investments, which combined are leading to a reduction in the margin. Atlantic Grupa was also faced with challenges regarding costs, and while the Company did record a 9% increase in revenue, EBITDA margin declined by 2.1 p.p. to 9%, as a result of the strong raw inputs growth, particularly coffee and cocoa that the Company recorded during the period. It should be noted that these goods’ price growth has been significant in the last couple of years, mainly due to bad weather events leading to low harvests and thus higher prices in South America and Africa.
Lastly, Span and Valamar Riviera recorded margins of 7.2% and 3%, respectively, increasing by 0.6 p.p. and 5.1 p.p., respectively. Span has invested a lot as an IT company in the last couple of years, especially in employees, who take time to become profitable due to training. However, this has been an ongoing process, and as such, improvements in margins could be expected going forward. On the flip side, Valamar Riviera recorded an improved margin as it recorded a solid 18% revenue growth YoY, supported by both international offerings as well as domestic ones. Cost growth was more subdued, and even though H1 doesn’t reflect tourism companies particularly well in Croatia, the improvement here is a part of the ongoing efforts, as the margin last year was negative at -2.1%.
Comparison of the net income margins of Croatian blue chips (H1 2025 vs. H1 2024, %)
Source: Companies’ data, InterCapital Research
Taking a quick look at the net income margins, 7 out of 9 blue chips recorded improvements. The highest margin was recorded by Končar D&ST at 28.6%, up 4.2 p.p. YoY, followed by Podravka at 19.8%, a 9.3 p.p. increase YoY, and Končar at 13.6%, a 4.9 p.p. increase YoY. The only other company with a >10% net income margin was HT at 10.6%, down 0.3 p.p. YoY, while the remainder was either at single-digit levels or, in the case of Valamar Riviera, negative. In particular, Valamar’s net income margin stood at -17.2%, but this was an improvement of 9.9 p.p. YoY.
Overall, the H1 results are positive for Croatian blue chips, with many of the companies recording solid profitability improvements YoY. Some companies faced challenges with costs, particularly when it comes to certain raw materials, but the overall trend of improvement is clearly visible.