CAPEX to Sales of Selected Regional Industrials

Today we bring you an overview of the CAPEX to Sales ratio for some of the largest selected regional industrials.

CAPEX to Sales ratio is important for industrials as this industry is considered asset-heavy, meaning large-scale operations are conducted with big equipment, high costs and with high barriers to entry.

Short-term wise, an increase in CAPEX to Sales ratio would indicate the company’s attempt to invest in its operations, under the consumption that sales did not report a drastic decrease. This increase above maintenance levels could be an attempt to achieve higher sales or purely to achieve economies of scale with a goal to reduce average production costs. Long-term wise, a high CAPEX to Sales ratio would indicate that the company has to constantly invest in the production process to achieve returns. With this said, we wanted to present the 5-year progress of CAPEX to Sales ratio for a few selected regional industrials.

Končar Group

Končar CAPEX to Sales ratio [2017-2021; %]

First, we note that Končar has been reporting steady growth in sales in the past five years with a CAGR of 11%. This is the main reason why mentioned ratio falls for Končar, with 2019 as an exemption due to above-average CAPEX in that year. We find this ratio, with an of 3.4% for the mentioned period, to be quite supporting, as Končar keeps delivering and increasing its sales with stable and relatively low CAPEX to maintain growth.


In 2019, Končar reported the highest CAPEX in the last five years, amounting to HRK 152m. That year, Končar primarily invested in new machinery and equipment. Besides that, in 2020 Končar invested HRK 123.8m with a cost rationalization goal. That year, Končar even postponed some of its planned investments as they were not necessary for business. The most significant part of the investment related to the competition of the project regarding distribution transformers and investing in company equipment and machines. In 2021, part of CAPEX was also postponed due to Covid, but the most significant part of the investment related to building a new laboratory. Within HRK 72m worth of CAPEX, the company also injected some of it for a certain level of maintenance.

Cinkarna Celje

Cinkarna CAPEX to Sales ratio [2017-2021; %]

Cinkarna invests a higher proportion of its sales than Končar, meaning maintenance CAPEX is needed for operations to continue. In 2017, part of CAPEX was regarding the company’s biggest segment – the titanium dioxide business unit. The focus was on replacing equipment in the mentioned segment, along with reducing environmental emissions. Cinkarna also finished the rehabilitation of barriers for non-hazardous waste and made an investment in railway transport infrastructure. 2020 was marked by an above-average CAPEX, which amounted to EUR 22.5, or 13.7% of sales in the year. Along with CAPEX regarding improved quality, Cinkarna also made a major investment at the Mozirje plant by setting up an additional life for masterbatches and powder coating. In 2020, the company emphasized that most of the funds invested were for improving the production of titanium dioxide products’s quality, while 2021 investment funds were used primarily to reduce emission and energy consumption along with higher plant efficiencies.

AD Plastik

AD Plastik CAPEX to Sales ratio [2017-2021; %]

The biggest part of the investments AD Plastik made in both 2018 and 2019 was directed at tangible assets – mostly in the new machines, equipment and capacity expansion for new projects. Around 20% of CAPEX was invested in intangible assets in both years. 2019 was primarily interesting as the Company invested HRK 161.8m, which was significantly more than the year before or the years to follow. This was due to investments in the Russian factory in Kaluga, which (now obvious), turned out as a not-so-great investment. In 2020 Company’s CAPEX to Sales ratio more than halved as Covid struct the whole industry. In the year to follow, the largest CAPEX referred to investment and equipment in the parent company and in Russia. Besides the obvious unstable political situation, during 2021 the industry was affected by a still-present semiconductor shortage that dragged EU market primarily. On top of that, during H1 2022, automobile production in Russia was totally stopped due to the unstable situation with Russia.

Domagoj Grčević
Category : Blog

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