In the first 9M of 2019, the company recorded an increase in sales of 0.6%, a decrease in operating profit of 44.1% and a net profit decrease of 43%.
As Cinkarna Celje published their 9M 2019 results, we are bringing you key takes from the report. According to it, sales witnessed a slight increase of 0.6% YoY, amounting to EUR 134.78m. Such a result is 7% higher than planned. Of the total sales, foreign sales recorded a 2.6% increase and now account for 89% (+1.8 p.p. YoY). On the other hand, sales on the domestic market observed a decrease of 13.1% or EUR 2.3m, amounting to EUR 15.39m. The increase in sales on the Group level could be attributed to the focus on the core activities, while abandoning the unprofitable ones.
When comparing the Q3 to Q2, the situation on the titanium pigment market did not change the dioxide Additional customs duties on Chinese material that are reflected in increased pressure of the Chinese material in the EU and neighboring markets. As the company announced in H1, their sales prices were up, while they slightly decreased in Q3. Average global sales prices are down by 1.3% YoY. The downward trend, which began last year, has not had a significant impact on the Group this year.
When looking at the change in the value of finished product inventories and work in progress item, one can notice a sharp decrease of EUR 16.2m, amounting to EUR -5.56m. Such a result affected all other results down the P&L. The company attributes the mentioned decrease to a drop in pigment inventories due to increased sales volume.
In the first nine months of 2019, operating expenses amounted to EUR 113.46m, noting a decrease of 1.8%. Such a result can be attributed to lower material costs by 1.4% or EUR 1.2m and lower employee costs by 4.4% or 1.02m.
Going further down the P&L, operating profit amounted to EUR 18.73m, showing a drop of 44.1%. Such a result could be attributed to above-mentioned decrease in change in the value of finished product inventories and work in progress. In the first nine months of 2019, net profit amounted to EUR 15.9m, showing a decrease of 43% YoY. However, it is important to note that this result is 91% higher that the managements plan.
Turning our attention to CAPEX, in the first 9M of 2019, the company invested EUR 8m in purchasing fixed assets and replacement equipment and environmental investments spent, representing 95% of the planned amount for the period. Most of the funds invested were for the production of titanium dioxide for improvement product quality, ensuring planned production volumes and reducing environmental impacts.
