In 9M 2022, Končar D&ST reported sales revenue growth of 29% YoY, EBITDA growth of 19%, and a net profit of HRK 83.1m, an increase of 18% YoY.
Yesterday, Končar D&ST, a Končar subsidiary published its 9M 2022 results. According to it, in the 9M 2022, sales revenue increased by 29% and amounted to HRK 1.37bn. Of this, the vast majority (90%), or HRK 1.23bn, is sold abroad, while the domestic market accounts for 10%, or HRK 139.9m. This would mean that the sales abroad increased by 36% YoY, while domestic sales decreased by 9% YoY. The main driver of this sales growth was the sales in the transformer segment.
Moving on to costs, OPEX amounted to HRK 1.27bn in 9M 2022, which is an increase of 31% YoY. The main driver of this was the increase in material expenses, which increased by 38% YoY to HRK 1.15bn. Staff expenses increased by 16% YoY to HRK 150.2m. This is the trend we have seen across many companies and sectors and is to be expected, given the increase in prices of commodities, energy, and of course, the overall inflation rate. In regards to staff costs, in 9M 2022, Končar D&ST employs 805 employees, which is an increase of 9.1% compared to the same period last year. As such, higher staff costs were both a combination of higher salaries offered, but also of the higher number of employees.
Given this situation, the EBITDA increased by 19% YoY to HRK 125.7m. This would imply an EBITDA margin of 9.2%, which is a decrease of 0.8 p.p. YoY. The financial income for the period amounted to HRK 12.8m (+94% YoY), while the financial expenses amounted to HRK 14.5m (+95% YoY), mainly driven by the FX differences in this period. As such, the net financial result amounted to a negative HRK 1.66m, which is an increase of 103% YoY. This would mean that the EBT amounted to HRK 101.7m, an increase of 23% YoY. Given the higher EBT, the tax also increased to HRK 18.6m, representing an increase of 55% YoY. Because of this, the effective tax rate amounted to 18% (+3 p.p. YoY). Finally, the net income amounted to HRK 83.1m, an increase of 18% YoY, which would imply a net profit margin of 7.9%, an increase of 1.2 p.p. YoY.
Končar D&ST key financials (9M 2022 vs. 9M 2021, HRKm)
Company data, InterCapital Research
Končar D&ST also commented on the main risks to the business. First of all, the possibility of the pandemic return means that Končar D&ST is in continual contact with its suppliers and buyers. Prices of commodities and materials, as well as energy, increased significantly, and given the uncertain nature of their movements, are also posing a risk. Supply chain disruptions are also presenting a threat. Finally, the direct impact of the Russian invasion of Ukraine on the business operations of Končar D&ST is not significant, although there is an indirect impact through the supply chain disruptions and the growth in prices of commodities, materials, and energy.
