Currently, Slovenia is grappling with the aftermath of severe flooding that has left an impact on various sectors of its economy, while June & July were marked by severe storms with wind and hail. Among those affected are some Slovenian blue chip companies, which have had to navigate a challenging landscape brought about by the flooding. This article delves into the ways in which the recent flood has influenced these companies and their financials.
Insurances
Obviously, insurance companies don’t want any risk they are insuring against, to materialize. Consequently, current weather inconveniences in the region will negatively impact their business. Now if you also have an insurance company that is quoted on the stock exchange, it is more than clear what will happen to people valuing its stock price. We could see two big insurance companies in Slovenia, Triglav and Sava Re, losing around 10% of their market capitalization in the span of two days, which is relatively rarely seen for companies within the insurance sector. However, in the upcoming trading days, prices slightly retraced for both companies and stabilized at those levels – telling us that market slightly overreacted due to the high uncertainty.
Triglav & Sava Re YTD share price development
Source: Bloomberg, InterCapital Research
Regarding the aforementioned CAT events, both insurance companies published a notice on Ljubljana Stock Exchange. Triglav stated that this year’s CAT claims will deviate significantly from their long-term average, negatively affecting on the Group’s planned annual result. However, Triglav noted that the impact will be limited due to Group’s adequate reinsurance protection. Finally, it was noted that a more detailed assessment of damage will be possible after these events come to an end and when assessing the damage will be possible.
Further, Sava also published a statement on the first estimate of the impact of storm and flood claims. Although firstly it was emphasized that the possible assessment of the incurred claims will not be able until the situation is fully contained, Sava Re published their first estimate of the impact nevertheless. Taking into account the reinsurance cover in place, the first estimated impact will be in the range of app. EUR 20 – 25m, but will be subject to further review. To put things in perspective, in its Business plan for FY 2023, Sava Re estimated a net profit of more than EUR 53m. In this context, we can see that the mentioned impact of storms & floods should not be overlooked. Below we present you with an achieved net profit for 2022, the value of the first estimate on impact and the estimate from the business plan of Sava, published during December 2022.
Finally, the last blue chip on Ljubljana Stock Exchange that published its impact from flooding is Cinkarna Celje. Cinkarna notified that at its Mozirje plant, which produces coating and masterbatches, storage areas were flooded. The company estimated its economic loss in terms of raw materials and finished product inventories in the range of EUR 510 – 620k. To put things in perspective, this business unit contributed app. 5% to the Group’s net profit for FY 2022. Finally, the company did not suffer any damage during the floods at the most significant production site in Celje.
Cinkarna Celje YTD share price development
Source: Bloomberg, InterCapital Research
