Electrica published their 9M 2023 results recently, showing a 3% YoY decrease in the top line, a 14% YoY increase in EBITDA a net profit of RON 418m, a decrease of 21.6% YoY.

In 9M 2023, Electrica posted a top line in the amount of RON 9,890.9m, which represents a 3% YoY decrease. Top-line development came with an overall favorable impact of the increase in the distribution segment. The positive development of average distribution tariffs that grew c. 20%. However, at the end of 2021, following the increase in the price of energy and natural gas on the international and national markets, the energy crisis, as well as the effects caused by these increases among the population, in Romania, a series of support schemes were applied to electricity and gas consumers, by establishing compensation and capping schemes. In 2023, the electricity market is totally liberalized for all categories of customers and the price is set by suppliers through free market mechanisms, both for universal services offers and for the offers related to the competitive market. Higher tariffs were partially offset by the decrease in distributed electricity volumes by c. 6.2%.  Also, favorable impact from the evolution of the revenues recognized in accordance with IFRIC 12 (revenues from the energy distribution segment) that are influenced by the recognition of investments in the distribution network in connection with the concession agreements.

Overall, OPEX decreased by 3.3%, while EBITDA increased by 13.5% YoY, amounting to RON 1,252.9m, as OPEX decreased more than the top-line did. Below the operating line, Electrica posted a deteriorating net financial result of RON -217m ( vs. RON -103m in 9M 20222) mainly due to almost 2x higher finance costs (amounting to RON 216.8m), further slightly amplified by lower financial income. Finally, as a result of the above-mentioned, the bottom line amounted to RON 418.3m (-21.6% YoY).

Electrica Key Financials (9M 2023 vs. 9M 2022, RONm)

By the end of October 2023, the Croatian mutual funds’ total NAV amounted to EUR 2.1bn, increasing by 1.9% MoM, but decreasing by 3% YTD, and 4.1% YoY. Furthermore, compared to its pre-COVID-19 maximum, the current level is 32.2% lower.

According to the latest release by the Croatian Financial Services Supervisory Agency, HANFA, the Croatian mutual funds recorded an improvement on a MoM basis, but are still below the level they were at the beginning of the year, or in the same period last year. As such, the NAV of the Croatian mutual funds amounted to EUR 2.1bn, increasing by 1.9% MoM, but decreasing by 3% YTD, and 4.1% YoY. Also, as compared to its pre-COVID-19 maximum, the current NAV is 32.2% lower.

In terms of the changes recorded by the Croatian mutual funds’ assets, on a MoM basis, the largest absolute increase was recorded by bond holdings, which grew by EUR 39m, or 3.1%. Following them there are money market holdings, at EUR 8.4m, or 23.4%. On the other hand, inv. funds declined by EUR 5.8m MoM, or 2.9%, deposits and cash by EUR 4.6m, or 2.2%, while shares decreased by EUR 2.3m, or 0.7%. Turning our attention to the YoY basis, the largest absolute increase was recorded by shareholdings, which grew by EUR 91m, or 35.9%, followed by bonds at EUR 42.2m, or 3.3%. On the flipside, deposits and cash decreased by EUR 167m, or 44%, while money market holdings declined by EUR 74m, or 63%.

Total assets of Croatian mutual funds (January 2015 – October 2023, EURm)

Source: HANFA, InterCapital Research

Of course, the change in the value of the asset is only one of the ways that the overall NAV can change. The other 2 are decisions by the fund managers to allocate more or less funds into specific assets, and the net contributions into the funds, dependent on investors of these funds. In October 2023, the overall net contributions amounted to EUR 47m. Of this, balanced, equity, and feeder funds recorded more redemptions of stakes in the funds (meaning people were leaving these funds), at EUR 6.8m, EUR 4.5m, and EUR 2.6m, respectively. On the other hand, the majority of the growth was driven by the other funds’ category, which recorded EUR 59m of net contributions, slightly supported by bond funds, which noted EUR 1.2m of growth.

Turning our attention to securities and deposits, in total, they amounted to EUR 2.01bn during October, of which foreign securities and deposits accounted for 61.9%, and domestic securities and deposits for 38.1%. In terms of changes, on a MoM basis, foreign securities and deposits increased by 3.9%, or EUR 46m, while domestic securities and deposits declined by 5%, or EUR 40m. Meanwhile, on a YoY basis, foreign securities and deposits grew by 37%, or EUR 336m, while domestic securities and deposits declined by 28%, or EUR 293m. As such, we can see that the main drivers of growth in this category were foreign securities and deposits, which domestic ones lagged behind. Finally, looking at the current asset structure of the funds, the majority is still invested in bonds, at 61.9%, representing a 0.9 p.p. increase MoM, and 4.7 p.p. increase YoY. Following them there are shares at 16.3%, decreasing by 0.4 p.p. MoM, but increasing by 4.8 p.p. YoY. Lastly, we have deposits and cash, as well as investment funds, at 9.9% and 9.1% of the total, respectively. These asset types recorded a MoM decrease of 0.38 p.p. and 0.43 p.p., respectively, while on a YoY basis, deposits and cash declined by 7.1 p.p., while inv. funds grew by 0.5 p.p.

Current AUM of Croatian mutual funds (October 2023, % of the total)

Source: HANFA, InterCapital Research

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