In 2020, the company recorded an increase in operating revenues of 5.5%, an increase in EBITDA of 33% and a net profit to majority of HRK 61.5m (+125%).
In 2020, Končar Group remained relatively unscathed by the Covid-19 pandemic, as operating revenue witnessed an increase of 5.5% to HRK 3.095bn. Such an increase came hand in hand with a solid increase in orders of 21.3%, while the company concluded significant deals in 2020, which might serve as a solid foundation for continuation of positive results. The mentioned deals can be seen below.
Revenue generated in the Croatian market amounted to HRK 1.123bn, a 3.1% decrease. Revenue generated from sale of products and services to HEP Group companies (HEP Proizvodnja, HEP Operator distribucijskog sustava, HOPS) amounted to HRK 450.3m (40% of total revenue generated from sale of products and services in the Croatian market).
The company supplied HRK 133.6m worth of products and services to the HEP Group indirectly via the companies Brodomerkur and Brodometalurgija, which resulted in total revenue from sale of products and services to the HEP Group amounting to HRK 583.9m.
Revenue from sale of products and services to HŽ amounted to HRK 95.6 million (8.5% of total revenue generated in the Croatian market).
On the other hand, sales on the export market amounted to HRK 1.85bn, representing a solid increase of 12.1%. The most significant export volume pertains to the Swedish market, amounting to HRK 259.6m or 14.1% of total export.
Operating expenses on the other hand reached HRK 3.015bn, representing an increase of 4.3%. Such an increase could be attributed to higher raw material and transport prices. However, we note that, KODT, the Group’s largest company hedges the risk of price fluctuations mostly with forward contracts. In terms of cost structure, virtually all operating expenses have increased aside from other operating expenses (-9.2% YoY). Although the company does not provide further information, the decrease arguably came from lower travel expenses (largest item within other opex).
As a result of the above mentioned, EBITDA increased by as much as 33%, amounting to HRK 177.6m. Such a result shows an improvement of EBITDA margin by 1.1 p.p. to 5.7%.
Going further down the P&L, operating profit has almost doubled (+90.5%), reaching HRK 80m. Furthermore, the equity accounted companies of Končar showed a result of HRK 26.9m, representing an increase of 49% YoY, indicating somewhat of a turnaround of very poor performance of KPT in 2019.
In 2020, the Končar Group reported a net profit of HRK 115.2m (+121.3%), while net profit to majority amounted to HRK 61.5m (+125%). Such a high increase could have been expected also be attributed to the base effect of a relatively lower performance of the Group in 2020.
We are happy to see Končar report a solid 2020 result, despite a challenging year. As a reminder the company will be holding a conference call today at 11:00am CET.
Deals Concluded in 2020
• Deal with HŽ Passenger Transport for 21 electric multiple units worth HRK 844.7m, final deadline for delivery of all trains is December 2023.
• Deal with the Croatian Transmission System Operator (HOPS) for “Revitalisation of central remote control systems for the power system by upgrade to a new version”, worth HRK 49.9m. Timeframe for contract performance will be 39 months, plus 36 months of maintenance during the warranty period.
• Deal with Liepajas tramvajs for a delivery of 6 low floor tramcars in Liepaja, Latvija. The deal is is a follow-up of Contract through which KEV contracted delivery of 6 low floor tramcar. The contracted value is EUR 8.84m, while the first tramcar will be delivered in 18 months. Meanwhile, all 6 will be delivered within 24 months from the contract signing (August 2022).
• Deal for the construction of a new 400/110 kV Ohrid substation, as part of an investment cycle of the North Macedonian transmission system operator (MESPO). The deal is worth EUR 14.3m.
• Deal with HŽ Passanger Transport for the delivery of 12 EMTs. The first of 12 new trains will be delivered in 14 months, after which one train is expected to be delivered per month during 2021 and 2022. The value of the transaction under the III Addendum amounts to HRK 464.9m (HRK 581.1m including VAT).
