Last week, Luka Koper published their Q1 2022 results, showing an increase in revenue of 23% YoY, an increase in EBITDA of 61% YoY, and a net profit of EUR 16.5m, +91% YoY.
During Q1 2022, Luka Koper achieved net revenue from sales of EUR 70.9m, representing an increase of 23% YoY, but also an increase of 20% compared to what the Group planned for the quarter. This was driven by the overall maritime throughput +18% YoY, increased volume of additional services, rising prices, and higher revenue from warehouse fees due to the extended retention time of goods in warehouses.
Growth was recorded across all the cargo categories. Looking at the general cargoes first, the Group achieved a 22% higher throughput YoY, ending the quarter with 351,615 tons of throughput in this category. This growth was driven by the higher throughput of steel products and caoutchouc which was offset slightly by a 4% lower timber throughput. However, with the increased amount of containers used for these goods, as well as the increase in additional services towards putting these goods into containers, the overall throughput increased.
Next up we have liquid cargoes, which grew by 40% YoY, driven by the increase across all liquid cargo products, but especially the renewed throughput of jet fuel (as the pandemic measures were completely eased across the world and especially in Europe, transportation by plane increased), and petroleum products, whose throughput increased by 33% YoY. Dry and bulk cargoes increased by 39% YoY and amounted to 1.75m tons. The growth was driven by the increased throughput of iron ore and coal, while an increased transshipment of soy, road salt, industrial salt, fertilizers, and scrap iron was recorded.
Maritime throughput in tones per cargo group (Q1 2021 vs. Q1 2022)
Slight growth in containers was also recorded (+1% YoY), amounting to 2.55m tons. This was despite the delays of ships from Asia continuing. This was due to the fact that delays happened both at the source of the goods in the containers, as well as the problems in Asian ports to supply these quantities. With the closing of several major Asian ports (most notable Shanghai) due to COVID-19 prevention measures, the whole situation was exacerbated.
Lastly, cars throughput increased by 11% YoY, and 177,864 cars were transhipped, mainly in the electric vehicles segment. However, as the car manufacturers are still facing semiconductor and other automotive parts shortages, combined with the war in Ukraine, there is still uncertainty facing this segment.
Throughput of containers (TEU) and cars (in units) (Q1 2021 vs. Q1 2022)
Moving on to operating expenses, they grew by 13% YoY and amounted to EUR 22.5m. The growth of OPEX was driven by the increase in the cost of material (+28% YoY), amounting to EUR 4.9m, cost of services, which grew by 9% YoY, amounting to EUR 15.1m, and other operating expenses, which grew by 16% YoY and amounted to EUR 2.43m. The cost of materials was impacted by higher energy costs due to higher consumption, and higher electricity and motor fuel prices. The cost of services was higher due to higher costs of port services, mainly referring to higher transshipment and concession fees, due to the increased throughput and higher net revenue from sales, as well as higher IT costs. Labour costs also increased due to the higher number of employees, as well as higher salaries.
This all amounted to an EBITDA of EUR 27.4m, an increase of 61% YoY, but also an increase of 76% compared to what the Company planned for Q1 2022. This would mean that the EBITDA margin also increased significantly, growing by 9 p.p. and amounting to 38.73%. Financial income amounted to EUR 51.7k, a decrease of -63%, mostly due to lower financial income from FX differences. Financial expenses amounted to EUR 86.7k, an increase of 6% YoY, mainly due to higher financial expenses from financial assets. This would mean that the net financial result amounted to EUR -35k (Q1 2021: EUR 57.9k).
Taking all of these factors together, net income amounted to EUR 16.5m, an increase of 91% YoY, and almost 120% compared to the Q1 2022 plan.
Luka Koper key financials (Q1 2021 vs. Q1 2022, EURm)
Meanwhile, total investment expenditure amounted to EUR 6.3m, representing a decrease of -65% YoY, and a reduction of -40% compared to the Q1 2022 plan. This was mainly due to the time lag in the construction of storage and handling areas in the southern part of Pier 1.
Impact of the Russian invasion of Ukraine
Luka Koper also commented on the impact of the Russian invasion on its business performance. According to the Company, they have a relatively small exposure to Russia and Ukraine, as the volume of throughput destined for those markets is insignificant. Furthermore, the Company does not have direct financial exposure to Russia, Ukraine, and Belarus, but indirect impacts might be felt through the developments in the financial markets. However, the consequences of the conflict will have a more direct impact through higher energy and raw material prices, shrinking foreign demand, financial stress, and a decline in confidence. There is also a potential for supply chain disruptions, which all combined could create additional inflationary pressures. However, the Company said they are already implementing a set of measures for managing these risks and their consequences.
The shareholders approved the allocation of 2021 profit of HRK 45.6m into the retained earnings, meaning no dividend payment in 2022. The approval to the Management Board of the Company for the acquisition of treasury shares was also given.
Arena Hospitality Group held its GSM yesterday, and the resolutions of the meeting have been published. Of note, two things should be mentioned. Firstly, the Company decided to put their 2021 profit of HRK 45.6m into retained earnings. This would mean that for now, there would be no dividend payments in 2022. However, it should be noted that the Company still retains the right to pay out dividends after August this year, as until August they are prohibited by law due to them receiving COVID-19 govt. support. At this point, however, this is a decision the Company is yet to make/might not even make. It should also be noted that during 2020 and 2021, the Company approved no dividend payments, meaning the last time they did pay the dividends out was in 2019.
The second thing of note is the decision on granting the approval to the Management Board for the acquisition of treasury shares. The approval is based on several conditions: they are authorized to acquire the treasury shares in the next five years; the total number of shares that can be acquired cannot exceed 10% of the Company’s share capital at the time of the acquisitions; the purchase price for the treasury shares cannot be above 10% or below 10% the average market price achieved during the previous day.
Furthermore, in the year that the acquisition of shares is made, the Company shall contribute a part of its profits to the reserves for these shares, so that the Company’s share capital and reserves do not become lower than what is required by law for the Company to have. Finally, the Company can either use these treasury shares through employee reward programs, or other treasury shares disposal programs or withdraw them, effectively decreasing the share capital of the Company. To read the resolutions in full, click here.