For today we decided to look at EBITDA and net profit margins of Croatian companies, for which we used 2019 figures.
It is important to note that comparing the margins across the selected companies is not necessarily the best way to do the comparison as many companies operate in different industries. Since both EBITDA and profit margin reflect to a great extent the industry in which the company operates in, we advise to compare it to the peer average or median. Nevertheless, it is still worth seeing which Croatian companies are more profitable and therefore have more “room” to potentially reduce the prices of their goods or services if needed, while still remaining a higher level of profitability.
EBITDA margin of Selected Croatian Companies (%)
Having said that, it comes as a no surprise that HT recorded the highest EBITDA margin of 41%, which is also above the regional industry average (based on the companies in our wider coverage) of 33.6%. Next come 2 tourism companies – Maistra and Valamar Riviera which operate with an EBITDA margin of 35.4% and 34.8%, respectively. On the flip side, Končar has the lowest EBITDA margin of 5.86%.
Turning our attention to the profit margin, 3 tourist companies lead the list – Arena Hospitality Group with 18.95%, Valamar Riviera with 13.85% and Maistra with 12.46%. On the flip side, Kraš has the lowest profit margin of 1.51% (and EBITDA margin of 9.98%), which is quite low given the industry it operates in.
High net margin can be a result of high operating profitability but it can also be influenced by taxes. This was the case in 2019 with Arena and Valamar who had received tax benefits related to their investments in capacity reconstruction. Based on Croatian Act on Investment Promotion, the company can obtain tax relief for investments realized. Due to these incentives in 2019 Arena had realized HRK 40.2m of profit tax income, while Valamar had realized HRK 73.4m of profit tax income. Maistra, that had in 2019 opened its premium five start flag-ship hotel Grand Hotel Park, in its preliminary financial results for 2019 showed income tax expense of HRK 25.6m. On the other hand, Maistra had in 2018 booked HRK 103.4m of profit tax income as majority of investments into its premium hotel was done in 2017 and 2018. In 2018 Maistra’s profit margin had amounted to 24%.
If you wish to compare EBITDA and net profit margins of these companies to their regional sector peers, you can do so by looking at our daily trading multiples which can be found here.
Profit margin of Selected Croatian Companies (%)
