In 2018, Viro recorded a decrease in sales of 35%, negative EBITDA of HRK – 79.3m and a net loss of HRK -177m.

As Viro published their 2018 preliminary results, we are bringing you some key takes from the report. According to it, Viro recorded a decrease in operating revenue of 35% YoY, amounting to HRK 675.9m. The decrease could be attributed to lower sales revenues by HRK 371.6m, while other revenues increased by HRK 10.9m (+70%).

Viro Revenues (2015 – 2018) (HRK m)

When observing the company’s expenses, Viro recorded a decrease of 33% in operating expenses, amounting to HRK 806.4m. The decrease could mainly be attributed to the decline in material costs, which amounted to HRK 458.3m (-57%). Viro’s operating expenses continue to be higher than their revenues and consequently, they recorded another negative EBITDA of HRK -79.3m, compared to HRK -119m in 2017.

The management has not provided much explanation for such a performance in the report, but it could partially be attributed to the decrease in price of sugar which has been fluctuating in the past year and is currently 4% lower YoY. The fluctuation in the price in the recent years could be attributed to the EU’s abolishment of quotas on sugar production in 2017, which led to a surplus of sugar produced, resulting in a lower price.

Going further down the P&L, Viro turned a net financial loss in 2017 of HRK -2.4m, to a gain of HRK 28.8m.

Meanwhile, the company recorded a net loss of HRK -101.6m which is relatively better than 2017, when the company recorded a net loss of HRK -177m.

EBITDA & Net Income (2015 – 2018) (HRK m)

Also, note that at the end of 2018, Viro, Sladorana and Tvornica šećera Osijek have signed a joint venture deal, based on which they will join their production capacity, know-how and experience and will establish a new company called Hrvatska industrija šećera.

In this joint venture, Viro and Sladorana will own 60% of the stake, while Tvornica šećera Osijek will own 40%. The main purpose of the joint venture is to create a bigger and a more efficient business system in the growing market liberalization conditions and a fiercer competition on the European market, caused by the above-mentioned abolishment of production quotas by the EU .   

To read more on our views on the sugar outlook click here.