In 2019, the Group recorded an increase in sales of 5%, a decrease in EBITDA of 24% and a net profit decrease of 29%.
In 2019, Cinkarna Celje recorded one of the best sales results in the company’s history which amounted to EUR 172.6m (+5.3% YoY). Note that this result also came in above the 2019 plan which projected sales in the amount of EUR 167.7m (+2.9%). The reason for this is improvements in market conditions in the titanium dioxide industry, where demand for product is picking up and no further pressure on price is evidenced. Adding to the result was the abandonment of the unprofitable rolled titanium sheets and building materials program, which in turn significantly improved the structure of the business programs and the internal performance of the entire system.
Operating revenues in FY 2019, amounted to EUR 177.7m, which on the other hand represents a decrease of 2.4%. The reason, why operating revenues are lower than sales is that the company observed a negative change in the value of inventories of products and work in progress of EUR -3.77m.
Turning our attention to operating expenses, they observed an increase of 5.4%, amounting to EUR 140.8m. The increase could be attributed to the rise in COGS by EUR 5.5m (+6.2%) which was higher than growth of sales (+5.3%). On the other hand, labor costs observed an increase of only 2.6%, amounting to EUR 30.8m.
Going further down the P&L, EBITDA amounted to EUR 36.9m, which represents a decrease by EUR 11.7m (-24.1%). Such a high decrease could be attributed to the above-mentioned decrease in operating revenues and increase in operating expenses.
As a result of the above-mentioned, net profit in FY 2019 decreased 29.1% YoY reaching EUR 21.7m while in the same time it is still double the target which amounted to EUR 11.1m.
Cinkarna Celje Performance (FY 2019 vs FY 2018)
CAPEX wise Cinkarna Celje spent EUR 12m in 2019. Most of the funds were spent on modernization, stabilization and improvement of the quality of our products, environmental protection projects and occupational safety and health. Part of the funds was also aimed at updating and ensuring the legal compliance of the devices and infrastructure.
In 2019 the company paid out EUR 22.8m in dividends, which translates to pay-out ratio of 75%. Last year dividend has amounted to EUR 28.3 per share and the dividend yield was 14.1%. As profit was in 2019 29% lower, that much lower dividend could be expected which would amount to app. EUR 20 per share. That would be in case we would apply the same pay-out ratio while the company would spend EUR 16.1m for dividends. The dividend yield at the current share price would amount to almost 13%.
The company has also published its 2020 business plan. You can read more about it here.
