In 9M 2021, Dalekovod recorded an increase in sales of 18.6%, an increase of EBITDA of 12.8%, and a net income to majority of HRK 32.4m (vs. a loss of HRK 19.7m in 9M 2020).
In the first 9M of 2021, total sales of Dalekovod Group amounted to HRK 1.1bn, representing an increase of 18.6% YoY. The increase of the operating income is primarily the result of the high rate of projects contracted during 2019 and 2020. In relation to the members of the Group, the total increase of operating income mostly came from the subsidiary Dalekovod Ljubljana and it was related to the implementation of the project for the construction of the 400 kV transmission line Cirkovce-Pince in Slovenia, which was contracted in 2020. An increase in EBITDA of HRK 8m also comes mainly from the operation of the subsidiary Dalekovod Ljubljana and the Group’s production segment, i.e., the companies Proizvodnja MK and Proizvodnja OSO.
During the 9M 2021, the business of Dalekovod was influenced by several factors outside its control; the ongoing COVID-19 pandemic, the rise of prices of raw materials as well as hampered supply chains. Besides these (but also partly because of it), the company had issues paying its financial liabilities. Due to cash restrainments, the company was able to attain only HRK 400m in new business arrangements, which presents a 40% decrease YoY.
The Group operates with limited financial abilities and in 3Q there was an increase in due liabilities to financial creditors based on the pre-bankruptcy settlement, which, as of 30 September amount to over HRK 106m in principal and interest. In the context of the aforementioned and taking into account the amount of accumulated losses and the low level of capitalisation of the Company, on 30 June 2021 the General Assembly of the company Dalekovod issued a decision on the decrease and increase of the share capital. A recapitalization program in the sum of HRK 410m took place in June 2021, which implied issuing 41m new shares. Process of increasing the share capital will be concluded after the implementation of all actions determined by the Companies Act of the Republic of Croatia related to the part of increasing the share capital. By completing the process of increasing share capital and raising funds by repaying the total debt from the pre-bankruptcy settlement, Dalekovod plans to successfully complete the pre-bankruptcy settlement and to ensure the viability of business operations.
Operating expenses, which amounted to HRK 1.06bn, increased 18% YoY. This is mostly due to higher material costs, representing a 29% or HRK 156m increase. On the other hand, employee expenses were down nominally HRK 8m or 3.5% YoY to HRK 224m. The number of employees stood at 1,217 at the end of reporting period, which is 95 employees less YoY. All other expenses were up, thereof, other expenses increased HRK 4.3m. value adjustments to short-term assets increased for HRK 4.2m. The aforementioned EBITDA increase (HRK 8m) is mostly due to the increase in sales. As EBITDA growth(+12.8%) was lower than growth of sales (+18.6%) , operating profitability decreased and EBITDA margin was down 30 basis points to 6.3%.
Net financial result deteriorated for HRK 4.0m, or 61% YoY, due to increase in interest expenses of HRK 5.5m despite decrease in FX losses of HRK 2.1m.
In the first 9M of 2021, Dalekovod recorded a net profit to majority of HRK 32.4m, representing an improvement comparing to the 9M 2020 results, in which the Company observed a net loss to majority of HRK -19.7m. The result from discontinued operations in 9M 2021 stood at HRK +74k which shows that the Group has successfully discontinued its galvanizing segment (the main contributor to the 9M 2020 decrease with HRK -51.3m).
