In both Croatia & Slovenia, the consumer confidence index decreased on an annual level, with a relatively “stable” downtrend, which is not surprising due to negative market news in the last two years. In Croatia, the Consumer Confidence Index decreased by 20.3 p.p. YoY in August, while in Slovenia it decreased by 19 p.p. YoY. Further, Slovenian’s Consumer confidence index in September also noted a 19 p.p. decrease on a YoY level.

Croatian National Bank published the data where the Consumer Confidence Index is available in Croatia. One can notice a steady improvement in the Index from 2015 up until 2020. In 2020, the Consumer Confidence Index fell from the range of positive 0-10 p.p. to -40 p.p. Since then, during the rest of 2020 and half of 2021, the Index recovered slightly. Nevertheless, since the other half of 2021, Consumer confidence shrunk to the previously mentioned level of c. -40 p.p. where is stood when Covid-19 hit. The highest impact on decreased consumer confidence levels was reported in the 12M expectance of economic activity in Croatia, which decreased by 37.6 p.p. Further, in August 2022, a slight improvement of 1.2 p.p. is noted compared to July 2022, but nonetheless, Index stands at low levels.

Consumer Confidence Index in Croatia

Statistical Office of the Republic of Slovenia published the data where the Consumer Confidence Index is available in Slovenia. A similar trend as in Croatia is evidenced. During 2022 the Index took a big hit for consumer confidence to pretty much the same levels as in Croatia, amounting to c. -40 p.p. During the first half of 2021, the Index recovered by more than 20 p.p., but since then returned to the previous low levels. On the MoM level, the Index further decreased by 1 p.p. compared to August 2022. . The highest impact on the Index decline was recorded in the category “Household financial situation over the next 12 months”, which declined the most (5 p.p. YoY). To partially offset mentioned category, the “level of unemployment over the next 12 months” recorded an increase of 5 p.p. on a YoY level, meaning that households expect lower unemployment levels in the following year. We note that the latest available data for Slovenia is available for September, while Croatia’s latest data is available for August 2022.

Overall, the Slovenian Economic climate indicator reported a decrease of 10.2 p.p. YoY, which was primarily driven by a mentioned lower Consumer confidence index (19 p.p. YoY decline). Further, the Confidence indicator in processing activities reported a double-digit decline of 15 p.p. and a decline in the Confidence indicator in construction, which decreased by 10 p.p. YoY. A slight offset to everything mentioned is reported in the Confidence indicator in retail trade. This is the only category that has reported an increase – an increase of 6 p.p. YoY.

Consumer Confidence Index in Slovenia

With the growing uncertainty and deteriorating geopolitical situation hitting the European equity markets hard, SBITOP ended yesterday’s trading 2.7% lower compared to last week, amounting to 995.05 points.

The current macroeconomic situation and the continued geopolitical pressures are weighing hard on the equity markets across Europe. In combination with high inflation rates, the interest rate hikes to combat said inflation, and the coming recession, more liquid regional equity markets like LJSE were hit hard, with the main index declining by 2.7% in a day, ending Monday at 995.05 points. In fact, this is the continuation of the trend that we have seen since the beginning of the year, but especially since the start of September 2022.

On a YTD basis, SBITOP lost 21% of its value. Since the beginning of September, it lost 12% of its value. Finally, on a YoY basis, it lost 15% of its value.

SBITOP and SBITOP constituents’ share price performance (2022 YTD, %)

In fact, looking at the main drivers of this decrease, in relative terms, NLB lost 29% of its value YTD, Krka and Sava Re 26% each, Petrol 21%, Unior 15%, Telekom Slovenije 13%, Cinkarna Celje 9%, Triglav 7%, and finally, Luka Koper lost 5% of its value.

The fact that the major heavyweights in the index (Krka, Petrol, NLB) all lost a significant amount of their value in this period, contributed heavily to the index’s decline. The overall macroeconomic and geopolitical situation is the driver for this, but if we were to look at specific companies, Krka is heavily affected by its business operations in Russia, something that could deteriorate in case of further sanctions, as well as the rouble depreciation, increasing costs on the Group level. Petrol recorded significant losses due to rising fuel prices in the environment where governments imposed regulations, capped prices, and decreased their margins by again regulating the markets which were previously liberalized. NLB recorded solid results for the year but unfortunately is affected by the rising interest rates which are starting to hit the financial sector hard.

It should again be emphasized that the most impactful driver of these declines are conditions and factors that are outside of these companies’ control (with the exceptions of the direct impact on business as in the case of Krka and Petrol), and as such, the decline in the equity is driven by rising interest rates and discount rates which are negatively influencing valuations. So the decline in equity is the same decline that can be seen across equity markets across the world and considering that the Slovenian equity market is one of the more developed in the region, it following these trends is to be expected.

Yesterday, Valamar shares went ex-date. When comparing it to closing price yesterday, the stock decreased by 4.5%, which is slightly higher than the DY of 3.6%.

This refers to the previously approved dividend of HRK 1.2 per share or a dividend yield of 3.6%. On the market closing price yesterday, the stock declined by 4.5%, which is slightly higher than the dividend yield.

As a reminder, Valamar reported H1 results with an increased top line, as well as higher OPEX, given the current inflationary pressures. Adjusted EBITDA increased by 47%, amounting to HRK 28.9, but bottom line profitability has suffered nevertheless.

Considering that Valamar did not pay out a dividend since 2019, in 2022 Valamar returned to dividend payment as soon as the conditions allowed. The 2022 dividend amount was 20% higher than 2019, while it was the same as the dividend proposal made for 2020 that had to be withdrawn due to pandemic and deterioration of cash position.

In the graph below, we are bringing you the historical overview of the company’s dividend per share and dividend yield. Note that the yields were calculated based on the closing price the day before the initial dividend proposal. The payment date is set for 28 September 2022.

To put things in perspective, since the beginning of the year, Valamar’s share price fell by 10% and only a 3.6% of price decrease can be attributed to the ex-date as without the dividend payment incentive for investors to invest in a stock vanishes.

Dividend per share (HRK) & dividend yield (%) (2015 – 2022)