Overview of Indebtedness of Croatian Companies (Q1 Update)

For today, we decided to bring you Q1 updated overview of the indebtedness and capital structure of Croatian Blue Chips. 

The outbreak of Covid-19 and its implications have put debt in spotlight for many investors. Therefore, for today we decided to present you with an updated analysis  of indebtedness of Croatian blue chips, by comparing net debt to T12 EBITDA (Q1 2020 results) and % of debt financing. We also added how much additional debt these companies could take in order to reach 3xEBITDA. 

Note that Adris Grupa and ZABA were excluded from the overview as Adris operates as a holding, while ZABA is a bank.

Net Debt/ EBITDA (Trailing 12m)

Among observed companies Končar, HT and Ericsson Nikola Tesla operate at a negative net debt, meaning their cash position (short term financial assets + cash and cash equivalents) exceed their financial debt.

Of the other constituents, food companies have a very low net debt/EBITDA. Atlantic Grupa operates with a net debt/EBITDA of 1.09, while Podravka with 1.35.  On the flip side, 3 tourist companies operate with the highest net debt/EBITDA (of the observed ones). Valamar comes first with 3.27, followed by Arena Hospitality Group with 3.2.

We also observed how much additional debt companies could take to reach 3xEBITDA which is in the region considered as a breaking point and red flag in terms of indebtedness. 

This analysis provides information on the companies’ potential for absorbing shocks as well as the potential for an internal growth through additional borrowing. It’s important to point out that companies with net debt above 3xEBITDA are not necessarily too indebted as not all them are equal and their industries differ (and the other way around – certain industries are not prone to hold any leverage). 

Potential Additional Debt (HRK m) to Reach 3x EBITDA 

Turning our attention to the capital structure, of the observed companies, 9 of them are mostly equity funded. Of those, HT leads the list with 97.5% equity, followed with Končar 89%. On the flip side, Optima Telekom is almost entirely debt funded with 97.8%.

Capital Structure of Croatian Companies

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