In H1, sales increased by 25%, EBITDA increase by 38.8%, while net profit increased by 56.7%.

Končar D&ST, the largest company of Končar Group, published their H1 results showing a very solid first half of 2021. To be specific, in the H1, Končar D&ST noted a sales increase of as much as 24.9% YoY, reaching HRK 696.8m. Such results indicate that Končar’s transformer segment is showing very strong results on both foreign and domestic market and should definitely boost to the overall Group result, which is in line with our expectations.

On the operating expenses side, one can note an increase of 20.4%, to HRK 692.4m, Of that the largest increase was noted on the material costs (+21.8%) of HRK 602.3m. We note that the company might be affected by the increased prices of raw materials which the company uses to in the production of transformers.  To be specific, the company is exposed to the price changes of copper, aluminium, transformer metal sheet, transformer oil, insulation, steel etc. However, Končar D&ST hedges the risk of such fluctuations with forward contracts in case of copper (which is up by +23% YTD), while for steel, transformer sheet and other important supplies parts the company attempts to mitigate the risk with semi-annual and annual contracts.

In H1, EBITDA reached HRK 30.1m, representing an increase of 38.8% YoY. This translates into EBITDA margin of 8.2% (+1 p.p.). Going further down the P&L, operating profit reached HRK 45.1m, representing an increase by 55.4%.

Going further down the P&L, the company reported a net profit of HRK 36.8m, representing an increase of 56.7% YoY. Meanwhile, profit margin increased by 1.1 p.p. reaching 5%.

Looking at CAPEX, one can note a relatively low CAPEX of HRK 3.8m, compared to HRK 25.9m. As a reminder, back in 2019, company invested HRK 94.7m, which represents their highest CAPEX since 2012.