In Q1 the company observed a decrease in sales of 51.5%, a reduction in operating loss by HRK 13m and a net income of HRK 2.8m.

As Viro published their Q1 2019 report, we are bringing you key takes from it. According to the report, the company observed a decrease of 51.5% YoY in sales, amounting to HRK 105.1m. Meanwhile, operating revenues decreased by 48.6%, amounting to HRK 112.3m. The company does not give much explanation to such a decrease, but it could partially be attributed to the decrease in the price of sugar which has been fluctuating in the past year and was lower by 7.5% YoY in Q1 2019. 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.

Operating Revenues (Q1 2019 vs Q1 2018) (HRK m)

Turning our attention to the company’s operating expenses, they amounted to HRK 112.5m, which is a decrease by HRK 119.4m (-51.5%).  Such a high decrease could mostly be attributed to a decline in material costs by HRK 81.3m.

Lower operating expenses led to an improved EBITDA of HRK 11.2m, which represents an increase by HRK 11.1m. However, when observing EBIT, the company recorded an operating loss of HRK -0.15m, which is a reduction in loss by HRK 13m.

Going further down the P&L, in Q1, Viro recorded a net financial gain of HRK 2.9m, which lead to the company having a positive net income.

In Q1, net income amounted to HRK 2.8m, which represents a decrease of HRK 5.2m (-65.1%).

EBITDA & Net Income (Q1 2019 vs Q1 2018) (HRK m)

As a reminder, 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.