IC Market Espresso 2 Mar 2020

Luka Koper Publishes FY 2019
Luka Koper published their FY 2019 results last week, showing an 1% YoY increase in sales, while EBITDA fell 26% YoY. Net profit was also down, amounting to EUR 40.4m (-32% YoY).

Luka Koper published their FY 2019 results las week, showing an 1% YoY increase in sales which amounted to EUR 228.7m. Higher revenue from the market activity were achieved from the warehousing, due to a slower goods shipment, stuffing and unstuffing of containers and rentals. In comparison with 2018, the revenue from the maritime throughput were lower due to achieved lower maritime throughput.

Maritime throughput was below the level registered in 2018 (-5% YoY) and 7.6% below the plan, totaling 22.79m tons. The decrease could primarily attributed to the lower throughput of dry bulk cargoes, which recorded a 17.17% decrease of 1.37 tons. It is worth noting that lower throughput was recorded in most commodity groups, with the exception of liquid cargo (+11.73% YoY), where we managed to achieve a historical record in throughput of 4.3m tons. Such performance of liquid cargoes came on the back of favorable trends in fuel transport and the capacity of liquid cargo terminals.

wdt_ID Cargo throughput (tons) 2019 2018 Change
1 Liquid cargoes 4.307.388,00 3.855.247,00 11,73
2 Containers 9.475.016,00 9.520.007,00 -0,47
3 Cars 1.111.433,00 1.156.265,00 -3,88
4 General cargo 1.280.194,00 1.526.026,00 -16,11
5 Dry bulk cargoes 6.618.616,00 7.991.074,00 -17,17
6 TOTAL 22.792.646,00 24.048.618,00 -5,22

Certain terminals, mainly Container Terminal, General Cargo (metal products segment) Terminal, Car Terminal and Iron Ore and Coal Terminal which are indirectly involved in the supply chain of these industries, have been most affected by the decline in production. Over the last quarter, the Car Terminal has seen an increase in throughput, which is mainly due to the tendency of manufacturers to place cars on the market before the end of the year.

EBITDA fell 26% YoY to EUR 73.1m. Note that the reason for such a strong decrease in operating performance was partly due to a one-off gain recorded in 2018 when the Group received a compensation in the amount of EUR 9.3m for the crane which was damaged after a ship toppled it during a storm. However, even if one would to exclude the mentioned one-off, the main reason for last year’s decrease in EBITDA lies in higher labour costs. To refresh your memory, in 2019 Luka Koper took on more than 400 new employees which were previously outsourced and provided labour services through various employment agencies. As a result, labour costs went up by EUR 15.1m.

Finally, the bottom line was positively influenced by lower tax expenses as Luka Koper benefited from higher tax reliefs from investments in 2019.  As a result, net profit in 2019 amounted to EUR 40.4m, representing a 32% YoY decrease.

On the balance sheet, the company continues to operate virtual without any debt as the net debt/EBITDA ratio amounted to 0.3x.

Luka Koper Key Financials (EUR 000)

Končar Preliminary FY 2019 Results

In 2019 Končar recorded an increase in sales of 12.8% YoY, a decrease in EBITDA of 27% and a decrease in net profit of 55.8%.

In 2019, Končar recorded an increase in sales of 12.8%, amounting to HRK 2.81bn. Of that, revenues on the domestic market account for HRK 1.16bn, which is an increase of 10.2% YoY. There, sales of goods and services to HEP account for the majority of sales.  

On the foreign market, Končar recorded sales of HRK 1.65bn, representing an increase of 14.7% YoY. Of that, most exports were realized in EU countries (65.2%), followed by Asian & African countries (6.5%).

Compared to 2018, a significant increase in sales was witnessed in Bulgaria (by HRK 56.9m), Guinea (by HRK 55.6m), Austria (by HRK 38.9m).

It is worth noting that in 2019, concluded deals increased by 16.8% or HRK 450m, while the backlog on 31 December 2019 amounted to HRK 3.34bn (+9% YoY).

When observing operating expenses, they amounted to HRK 2.9bn, which is an increase of 12.9% YoY. Of that material costs went up by 16.3% or HRK 274m. Higher operating expenses ended up being the driver of the results being lower throughout the P&L compared to 2018.

In 2019, EBITDA amounted to HRK 130.88m, representing a decrease of 27% YoY. This puts the EBITDA margin at 4.65% (-2.59 p.p. YoY). The company attributes such a decrease mostly to one-off value adjustment, mostly in fixed assets.  Operating profit amounted to 39.42m, showing a decrease of 57% YoY.

Net financial result of the Končar Group stood at HRK 14.5m compared to HRK -5.3m in 2018, which could be attributed to lower FX loss in 2019.

It is also worth noting that share of profit from undertakings with participating interest decreased by HRK 34.34m to HRK 13.71m. Končar notes that restructuring of the non-core part of the Group was continued in 2019. As a result, the shares of Končar – Kučanski aparati have been sold and are no longer the part of the Group.

In 2019, Končar recorded a net profit of HRK 52.7m, representing a decrease of 55.8%. Such a result puts the net profit margin at 1.8% (-2.7 p.p. YoY).

Croatia’s GDP growth at 2.9% in 2019

On Friday, the Croatian Bureau of Statistics published its first estimate on GDP for 2019 showing that in real terms it increased by 2.9% YoY. In Q4 Croatian economy expanded by 2.7% YoY, approximately in line with Q3 when GDP increased by 2.8% YoY.

Final consumption continues to be the main contributor to GDP which accelerated pace and increased by 3.8% YoY, 80bps higher looking at Q3 growth. The largest part of final consumption, household expenditure increased by a strong 4.0% YoY, while general government’s expenditure amounting to 1/4 of final consumption accelerated and increased by 3.5%. 

Gross fixed capital formation rose by 4.0% YoY, reflecting minor slowdown compared to the previous quarters of the year when investment expanded by 5% while in the first two quarters of the year growth was higher at 11.5% and 8.2%, respectively. Average growth of investments for the years still stands above 7.0% so it will add about 1% point growth to overall GDP.

The trend in exports and imports continued from the last quarter where exports growth accelerated and imports growth decreased. Namely, exports of goods and services increased by 5.6% YoY due to skyrocketing exports of services (1.1% YoY). On the other hand, imports of goods and services increased by only 1.1% with imports of goods being at 0.9% YoY compared to growth of 4.6% and 9.7% in Q1 and Q2. Deceleration of imports of goods and services growth to 0.1% YoY was a surprise in magnitude. It was driven by deceleration in increase of import of goods to 0.8%, and less services were imported than in same quarter of 2018.

Croatian GDP, Real Growth Rates (%, YoY)*

*Quarterly Gross Domestic Product, seasonally adjusted real growth rates

Optima Telekom Preliminary FY 2019 Results

In 2019, Optima Telekom recorded a decrease in sales of 3%, a flat EBITDA and a net profit of HRK 12.5m.

As Optima Telekom published their preliminary 2019 results, we are bringing you key takes from it. According to the report, sales amounted to HRK 524.6m, representing a 3% decrease YoY. Such a decrease came mostly on the back of lower revenue from public voice service, which was partly offset by higher multimedia and data revenues. A decrease in revenues from public voice service of 11.0% YoY represents a general trend on the global level through a longer time period.

Compared to last year, revenues from interconnection record a slight decrease of 0.4% primarily due to lower income from termination. Revenues from internet services are lower by 2.7% YoY, mostly as a result of a user decrease and prominent competitors’ activities.

The realization of data income in 2019 records an increase of 3.5% YoY,  while in Q4 there was a significant rise of 17.6%. Meanwhile, Multimedia revenues recorded an increase of 3.9%. The company notes that data services income and multimedia income are in the continuous focus of the company’s business.

When observing operating expenses, they amounted to HRK 484.57m, representing a decrease of 5% YoY. Such a decrease could be attributed to lower material costs by HRK 25.1m as a result of cost optimization.

The consolidated EBITDA before special items after leases amounted to HRK 132.3m, remaining relatively flat. Such a result came on the back of above-mentioned cost optimization, which was offset by lower sales. Such a result puts the EBITDA margin at 24.9% (+0.7 p.p. YoY). Meanwhile operating profit stood at HRK 46m, showing an increase of 27.4% YoY.

Net financial result amounted to HRK -28.68m, compared to HRK -29.96m in 2018. The lower result could mostly be attributed to lower FX gains.

In 2019, net profit amounted to HRK 12.46m, representing an increase by HRK 9.1m, primarily as a result of increased business cost efficiency, which is supported by a lower amortization and a decrease in asset value.

Turning our attention to CAPEX, in 2019 HRK 89m was invested, of which HRK 42.5m was invested in expansion of customer services. HRK 26.1m was invested in the development of an access optical network, expanding collocation network, user equipment for providing IPTV and internet services to residential users, as well as the equipment for connecting business users. The remaining HRK 20.3m was invested in core network.

Want to invest? Do not know how and where? Contact us and we will solve everything for you.