9M Top & Bottom-Line Performance of BET Index Components

With all of BET index’s components publishing their 9M results, we bring you an overview of Romanian listed companies’ top and bottom-line performance.

When observing the top line performance of BET index components, BVB tops the list with a 21.8% YoY increase in sales. The Bucharest Stock Exchange’s increase in sales was due to higher trading activity caused by the COVID-19 pandemic. The only other double-digit growth was posted by the construction materials manufacturer Teraplast. The Management stated that the organic growth in the 9M period shows that the Group can adapt, find solutions and perform even in the difficult context of 2020. They also claimed that their result could have been even better, but they were limited by the production capacities. To resolve this problem, the company recently announced that they are building a new factory worth EUR 10m.

Digi’s 9M growth in sales came due to rising sales in Romania and Spain. Revenue growth in Romania was mainly the result of the increase of cable TV and fixed internet and data RGUs in the period due to organic growth, as well as following the entering into force of the Networking agreement between RCS & RDS and Digital Cable Systems, AKTA Telecom and ATTP Telecommunicatios. The increase in Spain was due to the increase in mobile telecommunication services RGUs from approximately 1.7m in 9M 2019 to approximately 2.2m in 9M 2020, an increase of approximately 28. This was primarily due to new customer acquisitions caused by more attractive and affordable mobile and data offerings.

Medlife’s top line performance increased by 8.4% YoY. The increase was mainly the result of growth in almost all of the Group’s business lines, as well as the impact of the acquisitions completed by the Group in 2019 and 2020. Electrica’s sales in the 9M period amounted to EUR 963m, representing an increase of 3.7 % YoY. In the supply segment, revenues were higher by 4.3 % due to an increase in electricity sales prices on the retail market by 3.2 %, but also the increase in revenues from green certificates, the latter having a neutral impact in the supply margin. Regarding the electricity distribution segment, revenues were 2.1% higher, mainly as a result of the increase in distribution fees, which offset the negative impact of the reduction in the amount of electricity distributed.

Meanwhile Conpet and Purcari posted a flat top line performance.

BET Index Components’ 9M Top Line Performance (%)

On the flip side, Sphera led the laggards by posting a -27.6% YoY decrease in sales. The decrease was due to the COVID-19 pandemic and epidemiological measures made to prevent the spread of the virus. Romgaz’s sales fell 23% YoY following a decrease of revenues from gas sales (-28.4%). Meanwhile revenue from electricity increased by 36.1% and storage revenues increased by 25.9%.

OMV Petrom’s top line decrease due to the plummeting oil price. Alro’s sales dropped due to lower market demand for aluminium products due to the global crisis caused by the Covid-19 pandemic and to low LME quotations. Nuclearelectrica’s 9M sales fell by 2.2% YoY, due to the 3.2% decrease of the weighted average price of electricity sold in 9M 2020 compared to 9M 2019. Meanwhile the total amount of electricity sold in that period actually increased by 1.2%. Transgaz’s revenues from operating activities before balancing and construction activities decrease by 7% YoY, mainly as a result of a lower volumetric transport tariff by RON 0.83 per MVh. Finally, Transelectrica’s sales are down due to an electricity production and consumption decrease of 7% and 5%, respectively. Cross-border export physical exchanges rose by an annual 2.7%, while cross-border import flows registered a 27.7% annual rise in 9M period.

BET Index Components’ 9M Bottom Line Performance (%)

On the bottom line, Electrica, Medlife and Transelectrica were able to double their net profit by capitalising on their ability to translate their higher sales down the P&L to a higher net profit. Meamwhile Teraplast posted a net profit increase of 78.6% YoY due to the abovementioned strong top line performance.

BVB’s bottom line went up 18.2% YoY, rising on the back of positive contribution from a rising top line. The increase in sales were partially offset by higher personnel expenses and expenses with services provided by third parties. Other than that, it was hurt by a declining FX result mainly due to the reduction of the value of unrealized exchange rate differences from the revaluation of financial instruments in currency.

When observing the lowest bottom-line performance on the chart, OMV Petrom posted the largest decrease caused by the negative movement of oil price. Turning our attention to the financial sector, the two banks, Banca Transilvania and BRD Bank posted a decrease in net profit fuelled by higher provisions due to the COVID-19 pandemic. Meanwhile Fondul Proprietatea was hit by a decrease in value of their major shareholdings.  

Note that we excluded three components from the chart as their net profit turned to net loss. Those companies are Sphera, Digi and Alro.

Sphera posted a net loss of RON -10.7m due to lower sales caused by challenging environment in which their restaurants operated. The impact of lower sales was partially offset by lower costs related to payroll and employee benefits. Lower costs were fuelled mainly by state aid measures, reduced working hours and a lower number of employees in the period. Overall restaurant expenses in the 9M period were down by 22.8% due to lower cost of food & material (-30.1%, mainly volume related), payroll expenses (-33.1%), royalties (-27.8%), advertising (-31.5%) and rent (-12.2%).

Nuclearelectrica’ bottom line went up 14.8% Other than rising sales, the bottom line was boosted by a positive net financial result of RON 34.9m (from a net loss of RON -4.7m in 9M 2019). The rise can be attributed to a favourable FX result.

Filip Gracin
Category : Blog

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