According to the latest GDP release by the Slovenian Statistical Office, GDP growth on a YoY basis accelerates to 2.1% in Q1 2024.

The latest data for the Slovenian GDP has been released yesterday. According to the release, a significant increase in domestic expenditures has been recorded during Q1, the highest increase in the last year and a half. Breaking this down further, final consumption expenditures noted a 2% YoY increase, slightly lower growth compared to the previous quarter. Household consumption went up by 0.9% YoY. Furthermore, gross fixed capital formation grew just slightly by 0.6%, significantly less than in 2023 where growth rates amounted to high single-digit growth, mainly due to an increase in investments in buildings and structures. Changes in inventories contributed positively.

The external trade surplus contributed 0.2 of a percentage point to GDP growth. However, it is worth noting that a positive trade balance was achieved on the back of both lower exports & lower imports. Taking everything together, imports decreased by 0.9%, while export decreased as well by 0.6%. Breaking those categories further, imports of goods decreased by 0.1%, while imports of services decreased by 4.8%. On the other side of the equation, exports of services decreased by 7.1%, while exports of goods increased by 1.1% – overall resulting in a positive external trade surplus.

GDP by expenditures, constant prices, growth rates (%)

Source: SURS, InterCapital Research

All taken together, the previous quarter (Q4 2023) noted a positive growth rate, while the current quarter observed a more pronounced positive development in Slovenian GDP.

If we were to look at the value added by activities, the largest growth rate was recorded by the IT segment, which grew by 3.9% YoY in Q1 (6% in the previous quarter), contributing to overall growth. Besides this category, no notable increases have been recorded, with most categories ranging from 0 to 2% YoY growth. On the other hand, the largest YoY decrease was recorded by financial and insurance activities, which declined by 4.6% YoY, while in Q4 2023 it decreased even more pronounced by 10%. This segment was, at the time, under the influence of the natural disasters that affected Slovenia in July and August, which led to higher insurance claims and higher costs across the board. Higher interest rates also affected overall financial activity.

Slovenian GDP YoY growth rates (quarterly, real GDP growth rates, Q1 2015 – Q3 2023, %)

Source: SURS, InterCapital Research

In Q1 2024, Romgaz recorded a revenue decrease of 22% YoY, an EBITDA decline of 16%, and a net income of RON 1.24bn, a 28% increase YoY.

Starting at the top, Romgaz recorded a revenue of RON 2.27bn, representing a decrease of 22% YoY. This was influenced by a 6.7% drop in gas deliveries, an 18.3% decline in electricity production, and a 9.1% decrease in revenue from storage activities. Revenues from the gas sales represent app. 85% of Q1 2024 revenue, while revenue from electricity sales represents 4.8%, and revenue from storage services represents 6%. Meanwhile, on a QoQ basis, revenue grew by 3.7%, while gas deliveries increased by 5.7%.

Moving on to expenses, in total they amounted to RON 890.3m, decreasing by 30% YoY. The decrease in OPEX came mainly due to lower taxes and duties, which declined by 57% YoY to RON 270m, mainly as a result of lower windfall tax expense, which declined by 84% to RON 77m. Other expenses category also decreased, by 14% YoY to RON 157m, mainly due to lower expenses with CO₂ certificates, as fewer certificates were necessary considering the decreased electricity production as well as lower purchase prices.

On the other hand, employee expenses increased by 9% YoY to RON 216m, mainly due to higher wages. Exploration expense also grew by almost 60x YoY to RON 29.6m, due to higher exploration activities. As the OPEX decrease was faster than the revenue decline, EBITDA declined by 16% YoY and amounted to RON 1.58bn. This would also mean that the EBITDA margin “improved” by 4.84 p.p. to 70%. Meanwhile, earnings before taxes amounted to RON 1.49bn, decreasing by 17% YoY to RON 1.49bn. One other significant item to report was the income tax expense, which decreased drastically from RON 815.5m to RON 241.6m. This was because Romgaz had to calculate the solidarity contribution at the end of 2022, which was no longer present as of 2024, including in Q1.

As such, the net income actually managed to improve by 28% YoY to RON 1.24bn, implying a net income margin of 54.8%, an improvement of 21.4 p.p. YoY.

Romgaz key financials (Q1 2024 vs. Q1 2023, RONm)

Source: Romgaz, InterCapital Research

In terms of investments, Romgaz Group invested RON 460m in Q1, representing 64% of the Q1 2024 plan, and 10% of the 2024 annual plan. Romgaz itself made investments of RON 386.8m, an increase of 141% YoY. Investments in Q1 2024 included: drilling works for 2 wells that were finalized, one exploration and one production well, with a total of 5.6k meters drilled; prepared documents for procurement of drilling execution works for 9 wells, among others. If you would like to read more about the investments, the detailed breakdown is available on pages 10-13 of the Q1 report, which can be accessed here.

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