From January till the end of July 2022, the total tourist arrivals in Croatia equaled 10.4m, representing an increase of 62% YoY. Meanwhile, tourism overnight stays amounted to 54.4m, an increase of 46% YoY. When we compare tourist nights to record 2019, it is merely 4% below nights realized in 2019.

The Croatian Tourist Board (HTZ) has recently published its latest report on the number of arrivals and overnight stays in Croatia, as well as other tourism-related statistics. In July 2022, the trend that the industry has experienced during the entire 2022 continues, with positive growth in both the number of arrivals as well as the number of overnight stays.

In total, the tourist arrivals in July 2022 amounted to 4.62m, an increase of 22% YoY. Foreign tourists accounted for 4.23m, an increase of 26% YoY, while domestic tourists accounted for 390k, representing a decrease of 8% YoY. The increase in foreign tourists reflects the higher savings and no travel restrictions compared to 2021, while a decrease in domestic tourists can be attributed to the current inflation rates in Croatia, having an impact on the amount of disposable income of domestic tourists, thus reducing their number. Compared to the record 2019 however, the number of tourist arrivals is roughly the same, while the number of domestic arrivals is app. 10% higher. This would mean that the number of tourist arrivals is 1% higher than in 2019.

Moving on to the tourist nights, in total, they amounted to 29.6m, representing an increase of 18% YoY. Foreign tourist nights amounted to 26.4m, representing an increase of 21% YoY, while domestic tourist nights amounted to 3.2m, which is a decrease of 4% YoY. This would also mean that the current average stay per person amounted to 6.40 nights per person, which compared to the same period in July 2021, is a decrease of 3.4%. Comparing the number of overnight stays to 2019, we can see that in total, they were down 3%. Foreign overnight stays were 2% lower, while domestic overnight stays were 10% lower.

Total tourist arrivals and tourist nights in Croatia ( January 2019 – July 2022)

The decrease in overnight stays, however, is to be expected, as the current inflationary environment across Europe is also affecting the disposable incomes of arriving tourists. At the same time, tourist companies are under heavy pressure on the cost side, as energy, material, and staff costs have increased significantly in the past year, and year and a half. This would mean that even with a comparable number of arrivals, people are spending either less money on accommodation by choosing more budget-friendly options, or choosing to spend less time in a given type of accommodation, which is reflected in the lower number of overnight stays. Despite these challenges, however, the start of the summer season looks encouraging.

In fact, one of the largest tourism companies in Croatia, Valamar Riviera, has already commented on this. According to the Company, they expect accommodation revenue to be app. 20% higher than in 2019, driven by higher prices with a similar number of overnight stays.

Coming back to tourism as a whole, if we were to take a look at the tourist nights by country of origin, German tourists lead the way, with 18%, followed by Slovenia with 13%, domestic tourists with 11%, Czechia and Poland with 8% each, respectively, and Austria, with 7%. Overall, these countries accounted for 65% of the total tourist nights in Croatia, meaning that once again, the Central European market is the most predominant emitive market for Croatian tourism. Moving on to the counties by the number of overnight stays, Istra leads the way, with 7.92m, followed by Splitsko-dalmatinska with 5.7m, Kvarner with 5.3m, and Zadarska, with 4.86m.

Finally, taking a look at the period January – July 2022, the number of foreign tourist arrivals amounted to 8.88m, an increase of 72.4% compared to the same period last year, while domestic tourist arrivals amounted to 1.53m, an increase of 19.5% YoY. At the same time, foreign tourist nights amounted to 47.9m, an increase of 54% YoY, while domestic tourist nights amounted to 6.58m, an increase of 8% YoY. In total, arrivals in the period amounted to 10.4m, an increase of 61.9% YoY, while tourist nights amounted to 54.5m, an increase of 46.5% YoY. When we compare tourist nights to the record 2019, it is merely 4% below the 2019 result.

At the end of June 2022, the total deposits in Croatia equaled HRK 383.8bn, which is an increase of 3.3% MoM, and 12.3% YoY.

Recently, the Croatian National Bank (HNB) published its monthly report on the consolidated financial positions of the monetary financial institutions. In the report we can see that as of the end of June 2022, the total deposits in Croatia amounted to HRK 383.8bn, representing an increase of 3.3% MoM, and 12.3% YoY. This growth continues the positive trend of deposits increasing that has been recorded in the last couple of months, if we exclude March 2022 (which came as a result of the shock posed by the Russian invasion of Ukraine). On top of this, deposits usually increase more significantly in the summer season. In fact, the 3.3% MoM growth is the largest increase since December 2008, while the 12.3% YoY increase is the largest growth since September 2008.

It should also be noted that Croatia is among the EU countries with the highest percentage of deposits held by its citizens, so the single-digit MoM and double-digit YoY growths are not surprising. Also considering that deposits are the most liquid form of assets, especially as compared to other less liquid forms of assets that Croatians hold, like real estate. Finally, the current geopolitical and macroeconomic situation does not bode well for investing in riskier types of assets, so again, the higher amounts held in deposits are to be expected.

Looking at the deposits by their components, on a YoY basis, demand deposits increased by 17.4%, and amounted to HRK 162.9bn. Meanwhile, saving deposits increased by 8.8% YoY and amounted to HRK 220.9bn. The increase was also recorded on the monthly basis, with demand deposits increasing by 3.4%, while the saving deposits grew by 3.2%.

Breaking the saving deposits into domestic and foreign currency deposits, saving deposits in HRK decreased by -11.7% YoY, but still managed a somewhat small increase of 1.1% MoM. This can be attributed to two factors: First of all, as the switch to Euro is to be actualized in January 2023, more and more of the domestic currency deposits are switched into it, while at the same time, the influx of foreign tourists is increasing the demand for HRK, and thus, even though the decrease on a YoY basis is recorded as part of a longer trend, the MoM numbers show a slowing down of this trend. This would also mean that currently, saving deposits in HRK account for 12.99% of all saving deposits, representing a decrease of 0.3 p.p. MoM and 3 p.p. YoY. Meanwhile, foreign currency saving deposits increased by 12.7% YoY, 3.5% MoM, and amounted to HRK 192.2bn. This would mean that in June 2022, they accounted for 87% of all saving deposits, which is an increase of 3 p.p. YoY.

Finally, taking a look at the household deposits, they experienced a 9.7% growth YoY, 1.8% MoM, and amounted to HRK 255.2bn at the end of June. This would also mean that 66.5% of all deposits held were household deposits, representing a decrease of 1% MoM, and 1.53% YoY.

Croatian deposits breakdown (November 2012 – June 2022, HRKbn)

In H1 2022, OMV Petrom recorded sales revenue growth of 153% YoY, EBITDA growth of 153% YoY, and a net income of RON 4.65bn, an increase of 374% YoY.

Sales revenue increased by 153% YoY, and amounted to RON 25.6bn, mainly supported by higher commodity prices and higher sale volumes of petroleum products and electricity. The Refining and Marketing segment represented 55% of the total consolidated sales, while the Gas and Power segment accounted for 44%. Sales from the Exploration and Production segment accounted for only 0.1%, following the divestment of Kazakhstan subsidiaries in Q2 2021.

Following the growth in sales, operating expenses also increased, growing by 123% YoY and amounted to RON 19.9bn. The largest contributions to this increase came from higher commodity prices in terms of oil and gas, whose purchase costs increased to RON 11.69bn, an increase of 212% YoY. Meanwhile, production and operating expenses increased to 2.27bn, an increase of 21% YoY, while Production and similar taxes increased to RON 3.2bn, an increase of 557% YoY, mainly as a result of higher volumes.

EBITDA increased significantly, growing by 153% YoY and amounting to RON 7.3bn. This was due to a higher contribution of all business segments, following an increase in prices in Exploration and Production segment, significantly higher refining margins in the Refining and Marketing segment, as well as strong margins on gas from storage and third-party transactions in the Gas and Power segment. The aforementioned increased purchases (in terms of both volumes and prices for all products) and higher Exploration and Production taxation also had an influence on the EBITDA result.

Interest income amounted to RON 229.9m, an increase of 229% YoY, while interest expenses increased by 182% YoY, amounting to RON 395m. The faster interest expenses growth is due to the discounting of receivables, which was partially offset by higher interest income on bank deposits. Combined, this resulted in a net financial result of RON 172.9m, an increase of 140% YoY.

The income tax amounted to RON 899m, representing an increase of 383% YoY, with an effective tax rate of 16%, roughly the same on a YoY basis. All of this combined resulted in the net income to the majority of RON 4.65bn, an increase of 374% YoY.

OMV Petrom key financials (H1 2022 vs. H1 2021, RONm)

Moving on to the balance sheet, as compared to the end of 2021, non-current assets decreased by 2% YoY, and amounted to RON 31.86bn, mainly as a result of a decrease in property, plant and equipment, as depreciation and the decrease in decommissioning assets following reassessment exceeded the additions during the period. Meanwhile, current assets increased by 35% YoY, and amounted to RON 23.4bn, mainly as a result of higher cash and cash equivalents, higher inventories following the increase in volumes and in unit costs, as well as higher trade receivables following higher sales, and higher fin. assets, mainly in relation to derivatives. In total, this would mean that assets amounted to RON 55.25bn, an increase of 11% YoY.

Equity increased by 8% YoY, and amounted to RON 36.9bn, mainly as a result of the net profit generated in the current period, which was partially offset by the dividend distribution for the financial year 2021. Total liabilities increased to RON 18.3bn, growing by 16% YoY, mainly as a result of higher current liabilities.

Finally, CAPEX amounted to RON 1.39bn in H1 2022, an increase of 15% YoY. Investments in Exploration and Production amounted to RON 1.02bn, accounting for 74% of the Group’s total CAPEX. Refining and Marketing investments amounted to RON 261m, while Gas and Power investments amounted to RON 92m, with the majority of investments being directed to the planned outage at the Brazi power plant.

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