During Q1 2024, Končar D&ST recorded sales revenue growth of 36.1% YoY, while EBITDA growth was even more significant, and amounted to c. 220% YoY in the first quarter. Finally, net profit amounted to EUR 21.3m, a strong increase compared to EUR 5.7m in Q1 2023.
Yesterday, Končar D&ST, the most important subsidiary of Končar Group, published its Q1 2024 results. According to the report, sales revenue grew by 36.1% YoY and amounted to EUR 97.2m. Končar D&ST further noted that in Q1 2024, all the signed contracts amounted to EUR 217.6m, an increase of almost 2x. Furthermore, by the end of this quarter, the backlog (all the signed contracts) amounted to EUR 748.6m, an increase of 71.1% YoY.
We would like to note that Končar D&ST does not publish detailed explanation for its financial results, as this is done on the Group (Končar Group) level. Still, as Končar D&ST is the largest subsidiary of the Group, the increase in demand for transformers and the amount of signed new deals is surely one of the largest contributing factors.
In terms of operating expenses, in Q1 2024 it amounted to EUR 71.9m, an increase of 12% YoY. The largest increase came from the changes in inventories of work in progress and finished goods. Material costs have actually noted a strong 8.9%. decrease from EUR 72.6m to EUR 66.2 in Q1 2024 due to the cost-side stabilization. This was to be expected, as many industrial companies were hit with significant material cost growth in between 2022 and 2023, as the inflation in those categories was far more significant than inflation in consumer prices.
Staff costs grew by as much as 47.1% YoY to EUR 10.6m in the first quarter. This was under the influence of several factors, firstly the inflation which drove wage growth, but also due to the increase in the number of employees. In fact, by the end of 2023, the no. employees amounted to 1,160, an increase of 40.8% YoY. This was not only due to organic growth but also due to inorganic one, as the Company bought an additional 35% stake in Ferokotao d.o.o., becoming the majority owner at 51% by the end of 2023.
Despite the overall cost increases, the strong growth in revenue resulted in significant improvements in EBITDA. In the first quarter, EBITDA amounted to EUR 26.7m, noting an increase of more than 3x. This would also mean that the EBITDA margin improved as well, growing by 16.4 p.p. to 28.5% in Q1.
In terms of the net financial result, there we no significant changes. Net financial results amounted to EUR 544k (vs. net financial loss of EUR 363k in Q1 2023), further amplifying improved operating profitability. This came as a result of higher financial gains from FX and improved financial income.
All taken together, this led to a strong increase in net income of almost 4x, amounting to EUR 21.3m in Q1 2024 – vs. EUR 5.7m in the comparable period. This would also mean that the net income margin amounted to 22.7% in this quarter, a 14.5 p.p. increase YoY.
Končar D&ST key financials (Q1 2024 vs. Q1 2023, EURm)
Source: Končar D&ST, InterCapital Research
