For today we decided to present you with the updated analysis of the interest coverage ratio of Croatian companies.
For this we used 9M 2020 trailing 12m figures. Interest coverage ratio is used as a measure which gives us an insight on the company’s ability to meet its interest payments. The ratio is calculated by dividing the company’s operating profit by the interest expenses. Therefore, a higher ratio indicates that the company is less burdened by debt and the other way around. A ratio lower than 1 indicates that the company’s operating profit is not sufficient to cover for the interest payments.
Interest Coverage Ratio of Selected Croatian Companies
As visible in the graph Ericsson NT operates with the highest interest coverage ratio of 51.4, which does not come as a surprise given that the company operates with low debt. Next come 3 Food companies, Podravka, Kraš and Atlantic Grupa with an interest coverage ratio of 23.9, 15.3 and 14.8, respectively. All 3 companies operate also with low debt, as net debt/EBITDA of all of these companies ranges from 0.83x to 1.33x.
On the flip side, of the observed companies, the only one company operates with an interest coverage ratio below 1 – Optima Telekom.
We also note that tourist companies were excluded from the analysis, as all 3 of them recorded a trailing 12m operating loss.
To read our analysis of indebtedness of Croatian companies, click here.
To read about how much cash per share do Croatian blue chips have, click here.
By looking at the latest announcement from the Tax Administration of the Republic of Croatia, being tracked for Covid-19 pandemic purposes, in the period from 24 Feb till 22 Nov 2020 the value of taxable invoices decreased by 16.82% YoY.
A higher frequency data is compiled by Croatian Tax Administration, a department of the Ministry of Finance, who stated that the value of taxable invoices dropped by 16.82% YoY (or HRK 26.05bn) in the period from 24 February till 22 November. Meanwhile total taxable invoices in the mentioned period amounted to HRK 128.77bn.
Drop in taxable invoices in wholesale and retail trade in the same period was only at 8.63% (or HRK 8.62bn) while drop in accommodation and food services reached 45.77% (or HRK 11.11bn).
The value of taxable invoices in the 3rd week of November 2020, observed a double digit decrease after observing two weeks of high single digit decreases. To be specific in the 3rd week of November taxable invoices decreased by 10.9% YoY to HRK 3.02bn. Drop in taxable invoices in the wholesale and retail trade was relatively low at -5.88% YoY, while drop in accommodation and food services was at -32.4% YoY.
If we were to compare it on a WoW basis, the value of invoices has decreased by 5.21% or HRK 165.94m. We note that Croatia has recently imposed further restrictions in efforts to prevent the spread of the virus. We are eager to see how the mentioned restrictions will affect the value of taxable invoices in the coming periods.
In first 10 months of 2020, GWPs recorded an increase of 3.23%. Of that Non-life observed an increase of 4.15%, while Life is up by 1%.
The Slovenian Insurance Association published their monthly update on the GWP development in Slovenia. In the first 10 months of 2020, the Slovenian insurance market observed an increase in both life and non-life segment, leading to a total GWP growth of 3.23% YoY, amounting to EUR 2.173bn.
Non-life segment, which accounts for 71.5% of the total GWPs, recorded also an increase of 4.15%. Such an increase came on the back of a very strong health insurance performance, which recorded an increase of 8.48% YoY and is the largest non-life item in Slovenia (25% of total GWPs). The increase arguably came mostly on the back of increasing prices of health insurance premiums.
It is noteworthy that land motor vehicles insurance observed an increase of 3.7%, amounting to EUR 277.5m. Meanwhile motor vehicle liability insurance witnessed a slight increase of 0.31%, amounting to EUR 238.5m. Credit insurance on the other hand, observed a sharp decrease of 21.24%. This does not come as a surprise given the expected lower loan issuance activity in Slovenia as a result of Covid-19 outbreak coupled with the restrictions on the consumer loans placed by the Bank of Slovenia in November 2019.
Turning our attention to the life segment, it also recorded a 1% YoY increase, amounting to EUR 619.7m. Within the segment, unit-linked life insurance observed a slight decrease of 2.87%.
GWPs by Insurance Segment (Jan – October 2020) (%)
Solely October 2020
When observing solely October, GWPs recorded a decrease of 2.1% YoY or EUR 4.26m.
The mentioned decrease came mostly on the back of a lower performance of life insurance, which observed a decrease of 5.5% or EUR 3.36m. Meanwhile, non-life observed a slight decrease of 0.6%, which can mostly be attributed to a 9.6% decrease (or EUR 2.1m) in motor vehicle liability insurance. Such a decrease was partially offset by a 16.6% (or EUR 0.76m) increase in general liability insurance.