Croatian Ports 9M 2019 Results

As the Croatian ports, Luka Rijeka and Luka Ploče, published their 9M reports, we are bringing you key takes from them.

Luka Rijeka

In the first nine months Luka Rijeka observed a throughput of 3.6m tons, representing an increase of 5.5% YoY or 0.19m tons. The mentioned increase almost solely came on the back of the container growth of Jadranska Vrata d.d., which witnessed a rise of 20% or 0.33m. As of 3Q, containers account for 56% of the total throughput, amounting to 2.04 tons. Such growth was partially offset by a lower performance of bulk cargo of Luka Rijeka d.d., which recorded a decrease of 14% or 0.15m tons, amounting to 0.91m tons. Meanwhile, general cargo remained flat, accounting for 18% of the total throughput (0.66m tons).

The lower throughput of Luka Rijeka, does not seem to have affected the top-line, as sales observed an increase of 11%, amounting to HRK 114.9m. Operating revenues amounted to HRK 124m, representing an increase of 8% YoY.

When looking at operating expenses, one can notice an increase of 5% YoY or HRK 6.08m. Such an increase could solely be attributed to a spike in amortization from HRK 7.8m in 9M 2018 to 20.1m in 9M 2019. We assume that such an increase is a consequence of IFRS 16. This implies that operating leases have increased assets of the company and increased depreciation, instead of leasing (operating) expenses. All other items of the operating expenses witnessed a decrease, with material costs amounting to HRK 13.78m (-13% or HRK 5.9m). It is also worth mentioning that the company also reported provisions regarding legal actions of HRK 0.98m.

As a result, EBITDA amounted to HRK 16.4m, representing an increase of HRK 15.76m. EBITDA margin stood at 13.3%. Meanwhile, Luka Rijeka observed an operating loss of HRK -3.6m, which was mainly driven by higher depreciation.

As a reminder, Luka Rijeka holds a 49% stake in Jadranska Vrata, which is presented in the P&L through equity method. Therefore, the result of Jadranska Vrata is reported in the item the share in profit from undertakings linked by virtue of participating interests. The effect of higher throughput of Jadranska Vrata seems to have spilled over to their P&L, as Luka Rijeka’s share amounted to HRK 13.8m, recording a solid increase of 37% YoY or HRK 6.2m.

Consequently, Luka Rijeka witnessed a net profit of HRK 8.2m, which is an increase of HRK 6.21m. This puts the net profit margin at 6.6%.

Luka Rijeka Performance (9M 2018 vs 9M 2019) (HRK m)

Luka Ploče

In the first nine months of 2019, Luka Ploče recorded a throughput of 2.68m tons, representing an increase of 18.4%. In the same period, sales observed a solid decrease of 26.3% or HRK 46.4m, amounting to HRK 129.8m. Of that, revenues from port services, forwarding services, maritime services and shipping services amounted to HRK 100.29m and have increased by 25.15% YoY, while the revenues from sales of goods have decreased by 69.24%. When observing solely Q3, the company witnessed sales of HRK 32.19m, which is a decrease of 42% or HRK 23.2m.

When observing operating expenses, they observed a decrease by HRK 50m or 29%, amounting to HRK HRK 123m. Such a decrease can be attributed to lower material costs by HRK 56.1m, which were partially offset by higher staff costs by HRK 2.6m or 5.9% and value adjustments, which amounted to HRK 4.57m.

As a result, EBITDA  amounted to HRK 12.86m, which is an increase of 44.8% or HRK 3.98m. Meanwhile, EBITDA margin stands at 9.83%. Going further down the P&L, operating profit doubled and as of 3Q stands at HRK 7.53m. On a Q3 basis, Luka Ploče recorded an operating loss of HRK -3.6m, as a result of a poor topline performance.

In 9M, the company recorded a net financial loss of HRK -0.52m, of which HRK 0.35m refers to interest expenses, while HRK 0.17m refers to FX differences and similar expenses.

In the fist nine months of 2019, Luka Ploče recorded a net profit of HRK 7m (+81.9%), which puts the profit margin at 5.4%. However, when viewing only Q3, the company recorded a net loss of HRK -3.91m, compared to HRK 2.78m in Q3 2018.

Luka Ploče Performance (9M 2018 vs 9M 2019) (HRK m)

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