In Q1, the company recorded an increase in sales of 26%, decrease in EBITDA of 18% and decrease in net profit of 10%.

In Q1 2020, Ericsson NT realized solid results with sales revenue increasing by 26% YoY to HRK 487.7m, primarily due to significant sales revenue growth in the operator segment in the domestic market. Of the total sales revenue, domestic market accounts for 41%, services to Ericsson account for 45.8%, while other export markets account for 13.2%.

In the domestic market, sales revenue went up by 118% YoY. The company has continued their cooperation with HT in the segment of radio access network, with a focus on additional increase of capacity and securing readiness for commercially introduction of 5G technology once the necessary radio frequency spectrum has been assigned for it and required conditions have been met.

In export markets (excluding Ericsson market), sales revenue went up by 47% YoY.  In Q1 2020, the company signed new contracts in the operator’s segment in the markets of Bosnia and Herzegovina, Montenegro, Belarus and Moldova, worth approximately HRK 85m. The contracts encompass mobile networks expansions and maintenance in the upcoming period.

In Ericsson market, sales revenue was down by 12% YoY, due to change of business model regarding managed services of HT’s network in 2020.

When observing total operating expenses, they observed a sharp increase of 30% YoY, amounting to HRK 459m. In Q1 the company witnessed erosion of margins as a result of business mix due to taking over the full responsibility for managed services, restructuring charges, and the impact of COVID-19 during March. Selling and administrative expenses increased by 23% YoY, due to higher presales activities, related to 4G/5G radio access and core networks.

Going further down the P&L, operating profit amounted to HRK 33.5m, representing a decrease of 17.8%. Meanwhile, operating margin witnessed a decrease of 3.5 p.p. as a result of higher operating expenses and stood at 6.8%.

In 2019, Ericsson NT recorded a net profit of HRK 29.55m, representing a decrease of 10.3% YoY. Such a result puts the profit margin at 6% (-2.4 p.p. YoY).

Ericsson NT Performance (Q1 2019 vs Q1 2020) (HRK m)

Regarding the current Covid-19 situation, since the company operates globally, the company estimates that the situation could negatively impact a certain part of their business, slow down investments, realization of contracted projects and collection dynamics of customer receivables.

Yesterday, NLB held a call prior to announcing their Q1 2020 results, which is expected to be published on 14 May 2020.

Currently, all of the Group’s operations are running smoothly while the company is witnessing reopening of a couple more branches. By the next week 70 branches will be opening on full working hours. The company is currently seeing stable performance of their online services and did a significant shift to digital, while trying to migrate clients to the digital offering.

During the call the management stated that the bank is entered the current Covid-19 situation with a strong balance sheet when it comes to asset quality, very low NPLs and a solid CAR. We should expect to see a relatively normal Q1, with the addition of expenses for EUR 200m of issued subordinated debt kicking in.   

Besides that, cost of risk is expected to be in a range between 20 – 40 bps, which is quite higher compared to the previous years, however this does not come as a surprise as it is not plausible to observe negative cost of risk going forward. Note that the positive this cost of risk could be attributed predominantly due to IFRS 9, not loan provisioning.

When looking at the bank’s portfolio, the management stated that it is on the conservative side as they have an under average exposure to Tourism sector compared to other banks and a relatively low exposure to Transportation. The company management stated in an earlier call that the most impacted industries (such as hotels, restaurants, transportation) account for less than 10% of the exposures. Meanwhile, roughly 20% of the entire portfolio could be considered to be medium impacted (industries like wholesale, retail, automotive).

The bank is in working closely with their clients, both corporate and retail and have already seen requests for moratoriums. On the corporate side roughly 600 have asked for a moratorium, while on the retail side roughly 3,300. It is important to note that the loans which were given a moratorium will not have to be initially provisioned. However, after the moratorium expires, we can expect that there will be borrowers who will unlikely pay, which will than be included in the NPLs. Therefore, it is plausible to assume to see part of these NPLs in 2021. The company states that we will see elevated number of NPLs this year as well, while this should completely be manageable for the bank and well within their control. Clearly, this will have an impact on the profitability, but it is currently hard to quantify it given a lot of uncertainties in the following period.

Regarding Komercijalna Banka, the bank states that we could expect the consolidation to occur in late Q3 or early Q4, while there does not seem to be a possibility of the renegotiation of the concluded price.

At the current share price dividend yield would be 5.5%, while the ex-date is 9 June 2020.

Fondul Proprietatea published the resolutions from the GSM in which the shareholders approved the initially proposed dividend distribution. The approved dividend amounts to RON 0.0642 per share corresponding to the 2019 financial year profit. The dividend is 29% lower than the dividend paid out in 2019. At the current share price, this translates to a dividend yield of 5.5%, while when comparing it to the share price a day before the announcement dividend yield is 4.8%.

Note that the ex-date is 9 June 2020, while the payment date will be 1 July 2020.

In the graph below, we are bringing you historical overview of the company’s dividends.

Dividend per Share (RON) & Dividend Yield (%) (2018 – 2020)*

*compared to the share price a day before the dividend proposal

At the current share price, dividend yield is 2.7%. Ex-date is 3 June 2020.

Transelectrica published the resolutions from the GSM in which the shareholders approved the profit distribution. The shareholders approved the dividend distribution of RON 35.19m, which would be paid from the company’s retained earnings. Such a dividend translates to RON 0.48 per share, while at the current share price, dividend yield is 2.7%.

The ex-date is 3 June 2020, while the payment date is 25 June 2020.

As a reminder, the company did not pay a dividend in 2019 (for the year 2018).

In the graphs below, we are bringing you a historic overview of the company’s dividend per share and dividend yield.