Today we decided to bring you an overview of the FY 2022 EBITDA and profit margins of Slovenian companies as the majority of blue chips published their results.
Over the course of March, Slovenian companies posted their FY 2022 results. As a result, we decided to bring you an updated EBITDA and profit margin analysis. One thing that is important to point out is that comparing the margins across the selected companies is not necessarily the best way to do the comparison, considering that many companies operate in different industries. Since both EBITDA and profit margins reflect to a large extent the industry in which a certain company operates, it is more advisable to use the peer average or median.
Even so, it is worth seeing which Slovenian companies are more profitable and therefore have a better position in managing their prices and services (reducing costs, increasing prices of goods/services) thus increasing these margins – and which are not. It should also be noted that financials (Triglav, Sava Re, and NLB) were excluded from these comparisons due to the nature of operations & reporting in the sector.
FY 2022 EBITDA margin of Selected Slovenian Companies (%)
Source: LJSE, Bloomberg, InterCapital Research
Out of the four observed companies, Luka Koper recorded the highest FY 2022 EBITDA margin at 36.6%. If we were to look at 2022 vs. 2021, the margin increased by 9.8 p.p. YoY. The higher margin was a result of more robust and profitable business operations during the year. We note that Luka Koper reported a 37.2% higher top line due to higher net revenue from warehouse fees resulting from the extended retention time in warehouses due to the current situation in the global logistics market, which decreased at the end of 2022 because of the gradual normalization. Further, revenue grew due to the increase in prices of services, increased volume of throughput, and additional services in all commodity groups, but also due to higher productivity. However, Luka Koper also increased its profitability on all profitability levels.
Next up, there is Krka with an EBITDA margin of 28.6%, decreasing slightly by 1.1 p.p. YoY. Regarding Krka, in Q4 revenue further accelerated to 22.1% YoY (vs. 4.6% YoY in Q3), due to quantities growth on Krka’s markets coupled with the increase in prices of nonprescription products. However, the biggest turn of events occurred in Russia – Russia was up 44% YoY in Q4 due to strong volume growth of non-prescription drugs and a surge in their prices coupled with an increase in prescription drugs due to rouble depreciation. The incidence of common cold and flu increased because restrictions associated with COVID-19 were lifted. Finally, EBITDA was under a positive impact of rouble appreciation. Rouble appreciation impacted the inventories valued in the Russian rouble, which were later sold at much higher quantities than we have estimated so realized EBITDA grew more than expected.
Following these two, we have Cinkarna Celje and Petrol. Cinkarna recorded an EBITDA margin of 28.2%. In 2022 Cinkarna recorded an increase in sales revenue of 18% YoY. Sales grew on the back of higher spot prices of the titanium dioxide segment, which were driven by a favorable market situation for the most period throughout the year (with Q4 as an exception as the trend started to reverse). This growth in the top line translated directly to a higher EBITDA and bottom line. Lastly, there is Petrol, which reported an EBITDA margin of 1%, which is more or less in line with the specificity of the industry the company operates in. On a YoY level, Petrol reported a significant decrease in EBITDA margin of 4.8 p.p. Due to the capping of prices in the beginning and later capping of margins in 2022 Petrol was unable to achieve the announced business plan. Petrol was affected by the fuel price regulation imposed by governments on all their markets. In some of their periods’ margins were fixed and in certain periods prices were capped on its main markets of Croatia and Slovenia. Overall, Petrol announced further cost optimizations in 2023, as it views 2022 as a challenging year. For 2023 EBITDA is expected at EUR 250m and net profit at EUR 117m, putting it on the level of 2021 net result. Risks to achieving the plan entail further changes in governments’ regulation, disruption to supply chains, rising inflation, and an increase in volatility of energy markets.
FY 2022 Profit margin of Selected Slovenian Companies (%)
Source: LJSE, Bloomberg, InterCapital Research
Looking into the 2022 profit margins, we can see that profit margins are in line with EBITDA ones. Luka Koper leads the way with a net margin of 23.7%, which was achieved on the back of the aforementioned business results. Krka follows the way with 21.3%. As a result of an increase in FY net profit of 18% YoY, the Company’s net margin also increased by 1.4 p.p. Krka is followed by Cinkarna with an 18.6% net profit margin, which also increased by 1.4 p.p. YoY. This increase in profit margin is driven by strong top-line growth due to higher selling prices. Last to follow is Petrol with a net profit margin of 0% (-2.4 p.p. YoY), which is a direct result of the fuel price regulation imposed by the governments on all of their markets.
