Cinkarna Celje published their H1 2020 results yesterday, posting an 4% YoY decrease in sales, 15% YoY decrease in EBITDA and a net profit of EUR 9.9m (-21% YoY).
In H1 of 2020, Cinkarnca Celje recorded sales revenues of EUR 88.7m, which represents a decrease of 4% YoY. The result represents a significant decrease when compared to last quarter’s 5% YoY increase in sales. The reason behind the drop lies in several factors. First, the spread of the COVID-19 pandemic triggered a process of accumulation of pigment inventories by customers at the end of Q1, which positively impacted the top line. Secondly, the absence of Chinese producers in the European market at the beginning of the year added to the rise in demand. However, in Q2 lower production and higher inventories led to a decrease in sales. Still, according to the Management’s estimates, Cinkarna Celje’s decline in sales was smaller than the overall decline in sales in the titanium dioxide market.
EBITDA fell 15% YoY, amounting to EUR 17.7m. The primary reason for the decrease are lower sales and higher operating expenses which went up 3% YoY. Finally, the bottom line amounted to EUR 9.9m, representing a 21% YoY decrease.
However, note that in 2020 Cinkarna Celje changed the method of valuing stocks of finished products compared to previous years. This change increased the operating result of the first half of the year and will reduce the operating result of the second half of the year, while the impact will be nullified on an annual basis. The positive impact of the change on net profit in the first half of the year amounted to EUR 2.35m.
Turning our attention to CAPEX, in H1 2020 Cinkarna Celje invested EUR 5.6m, which is 28.2% of the planned amount. The amount is lower than planned mainly due to the suspension of non-urgent investment and maintenance works during the pandemic due to COVID-19, but also due to the usual dynamics of works falling due for the most part in the second half of the year. The majority of invested funds were intended for the production of titanium dioxide to improve the quality of products, ensure the reliability of individual devices or processes, improve the conditions of safe and healthy work and reduce environmental impacts.
Cinkarna Celje Key Financials (EUR)
