FY 2021 Top & Bottom-Line Performance of BET Index Constituents

Since all the BET index constituents have published their FY 2021 results, we decided to bring you an overview of their top and bottom-line performance.

When looking at the top-line performance of BET index constituents, we can see that Teraplast and One United Properties are at the top, with an increase in sales of 55% and 54%, respectively. Teraplast, a construction materials manufacturer, has recorded an increase in sales due to the increase in volumes sold, despite the rise in raw material costs and a decline in the construction sector in Q2 2021. Engineering works also fell by 5.5%, which had a positive influence on the Company’s market share (and thus sales), due to the Company’s competitive advantage. Strong performance is also visible on the foreign market, where the value of exports doubled compared to the previous year. One United Properties, a real estate developer, recorded an increase in its residential segment of 54%, which was the main driver of the increase in total sales.

Next up, we have Romgaz, a natural gas producer and supplier, experienced an increase of 44% in sales revenue. This growth was influenced by an increase in the quantity of natural gas sold (+12.7% YoY), which drove revenue from natural gas up 52.4% YoY. Revenue from electricity sales also increased app. 70% YoY. Following them, we have ALRO, a vertically integrated aluminum producer, which had an increase of 39% YoY, on the back of increased quantity of aluminum production.

Going further down the list, we have MedLife, OMV Petrom, and Sphera Franchise Group with increases of 33%, 32%, and 30%, respectively. MedLife, a healthcare services provider, fueled by the growth across several of its business segments, including clinics (+32.3%), hospitals (+26%), laboratories (+31%), pharmacies (+35%), and dentistry (+52%) YoY. The acquisitions and investments that company made in 2020 and 2021 also provided more fuel for this growth. OMV Petrom, the largest oil and gas producer in Southern and Eastern Europe, had the sales increase driven by the higher sales of petroleum products, both in terms of price and volume increases. Sphera Franchise Group, a franchise holding company, had an increase in sales due to the sales increase of KFC, Pizza Hut, and Taco Bell restaurants in Romania, while also experiencing sales growth in the Republic of Moldova and Italy.

Next up, we have Nuclearelectrica, and Purcari Wineries, with increases in sales of 28% and 20%, respectively. Nuclearelectrica, a nuclear energy producer, had recorded growth in revenue due to the increased sales of electricity (+27.6%). Purcari Wineries, a wine producer, had an increase in sales due to its core business of wine production which revenue increased by 17% YoY.

Top Line Performance of BET Constituents – 2021 vs. 2020 (%)

On the flip side, BRD, one of the largest European financial service groups, experienced the lowest revenue growth of 1% YoY. If we look at the company’s financials, we can see that net interest income, net fees, and commissions income, as well as net banking income, remained mostly flat, which are the main reasons for this low increase. Next up, we have Transgaz, Conpet, BVB, and Banca Transilvania, which all grew by less than 10% YoY. Transgaz, the national gas transmission company, experienced a 2% increase in sales due to the increase in commodity revenue (+15%) while at the same time, commodity transmissions revenue and international gas transmission revenue decreased. Conpet, an oil transportation company, experienced a 4% increase in revenue due to higher quantities of oil transported. BVB, Bucharest Stock Exchange, experienced a 9% increase in revenue, supported by post-trading and register segments revenue increase. Finally, we have Banca Transilvania, a banking company(and the biggest constituent of BET with 20% of total), experienced a 9% increase in revenue, supported by a 6.2% increase in net interest income and a 22.8% increase in net fee and commission income.

Moving on to the bottom-line performance of the BET constituents, we have two companies, One United Properties, and OMV Petrom, which experienced an increase of over 100% YoY, at 186% and 122%, respectively. One United Properties growth in net profit can be attributed to the residential segment revenue growth. The residential segment has a net margin of 36%, contributing strongly to their net income result. OMV Petrom’s net profit increase can be attributed to the strong revenue growth, which drove a solid EBITDA, which also grew by 59% YoY.

3 other companies (MedLife, Romgaz, and Teraplast) had a net profit growth of over 50%, at 84%, 52%, and 50%, respectively. Medlife’s strong growth across its business segments also had a positive impact on its EBITDA, which increased by 45% YoY. Together, this had a positive impact on the company’s net profit as well. Romgaz’s increase is closely tied to the increase in gas prices/production, which was also evidenced in its top-line growth. Teraplast’s growth can be attributed to the growth it experienced across its business segments: Installation & Recycling line (66% of total turnover), increased by 40%, and its EBITDA increased by 18%. Compounds business line had a turnover increase of 109%, while EBITDA increased by 150% YoY.

Bottom Line Performance of BET Constituents – 2021 vs. 2020 (%)

We would like to note that several companies were excluded from this list, as their net profit turned to net loss or their net results were not available (the case of the last companies mentioned). These companies are Transelectrica, Electrica, Sphera, and Digi.

Meanwhile, Alro experienced the largest relative decrease in net profit, at -92% YoY. The decrease was mainly due to the lower other operating income, which in 2020 included govt. grants in the amount of RON 647.2m as compensation for higher energy costs. Also, in Q4 2020 the company recognized govt. grants related to the EU-ETS compensation scheme in the amount of RON 99.3m. In 2021, this was not recognized and had an influence on a lower EBIT, which decreased to RON 228.1m (2020: RON 399.5m). Together with higher gas and electricity prices, as well as FX losses, this had a negative impact on the company’s net profit.

Next up, we have Purcari Wineries and BVB, which decreased by -31% and -20%, respectively. Purcari Wineries’ decrease in net profit is due to the lack of one-off in financial income that was experienced in 2020, referring to a sale of Glass Container Company in the amount of EUR 7.8m. This means that the company had lower financial income, which directly impacted its net financial income, and thus, its earnings before taxes. Considering its income tax expense remained roughly the same, this had a negative impact on the company’s net profit. Looking over to BVB, the main driver of net income decrease was the fact that operating expenses grew faster (+19%) than the company’s operating revenue (+9%). This can be attributed to the new business development and promotion projects of BVB, as well as higher personnel expenses. Together, this had a negative impact on the BVB’s operating result, which directly reduced its net income.

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