With the publishing of all the H1 2022 results by the CROBEX10 constituents, we decided to bring you an overview of the change in their EBITDA and profit margins during H1 2022.

One thing that should immediately be noted is the fact that comparing margins across different industries these companies operate is not necessarily the best way to give a comparable overview. This is because the EBITDA and profit margins depend on the industry they operate in, so a real comparison to any of these companies would be to their peer average or median. Even so, it is still worth looking at which of these companies are more profitable and therefore have a larger cushion to potentially reduce prices of their goods or services if necessary, while maintaining a higher level of profitability.

Besides that, we note that looking at only H1 margins might lead to misleading conclusions as some of the observed companies derive most of their earnings in other quarters.

H1 – EBITDA margin of Selected Croatian Companies (%)

Out of all the selected companies, the company with the highest EBITDA margin is Atlantska Plovidba, standing at 61.7%. The company also reported a very strong YoY margin increase of 7.2 p.p. YoY. Good results came as a result of general macroeconomic improvement. The fleet utilization rate amounted to a high 97%, while furthermore, the average daily freight rate sharply increased to USD 21,449 per day. All of the above-mentioned led to an EBITDA increase of 77.8% and therefore, increased the EBITDA margin to 61.7%.

Atlantska Plovidba is followed by Hrvatski Telekom, which had an EBITDA margin of 42.6% in H1 2022, an increase of 0.7 p.p. YoY. HT reported lower sales due to the deconsolidation of Optima. EBITDA decreased due to mentioned lower sales, even though COGS fell too. HT reported solid performance in HT Croatia and Crnogorski Telekom.

Next up, we have Podravka and Končar with EBITDA margins amounting to 15.1% and 13.7%, respectively. Both companies had a good performance during the year, with strong revenue growth. Podravka with an EBITDA margin of 15.1%, decreasing by 0.9 p.p. YoY. Podravka’s sales were up due to price increases of food, but EBITDA reported a smaller increase in H1 mostly due to higher operating expenses, which increased by 9.7%, resulting in a lower EBITDA margin overall. Končar reported very strong results in virtually all segments, while the Transformer segment noted a sales increase of 32.9% YoY, reaching HRK 1.53m. As a result of robust operation growth, EBITDA noted a sharp increase of 130.2% to HRK 298.5m with EBITDA margin increasing as much as 5.6 p.p. YoY. To further boost Končar’s bottom line, its equity-accounted companies showed strong results of HRK 7.2m.

At the bottom of the list, we have AD Plastik, looking at margin levels only. AD Plastik reported an EBITDA margin of -13.3%, reporting a decrease of 26.9 p.p. YoY. This also translated to a lower bottom line margin, as on FY 2021 basis AD Plastik generated 27% of revenues in Russia. In H1 Russia’s sales were down 29.8% due to the stoppage of production as most western car manufacturers and Russian car manufacturers have stopped their production activities. Furthermore, the EU market was down due to the semiconductor shortage, overall resulting in lower operating profitability. Below the operating level, the net financial result significantly improved and slightly offset profitability margins decrease due to FX gain amounting to HRK 24.4m.

We also note that we have not included Croatian tourists in the overview, as they reported a negative EBITDA and a net loss. H1 tends to be a loss-generating quarter for Croatian tourists, so the performance should not be considered indicative of the FY results, as they make most of their profit during Q3.

H1 – Profit margin of Selected Croatian Companies (%)

Looking over to the profit margins, the company with the highest margin is still Atlantska Plovidba, with 41.6%. Following them, we have Končar and HT with 10.3% and 8.9%, respectively. On the flip side, the only company with a profit margin lower than 5% was AD Plastik, at -14%, as the company’s bottom line was strongly impacted by both semiconductor shortage and stoppage of production of most western car producers and Russian car producers.

At the end of July 2022, the NAV of Croatian Mandatory Pension funds equaled HRK 132.3bn, which is an increase of 2.5% MoM, and 3.7% YoY.

The Croatian Financial Services Supervisory Agency, i.e. HANFA, has recently published its monthly report on the developments recorded by the Croatian mandatory pension funds. As these funds are major players in the Croatian capital market, with significant amounts of investments into various companies, looking at how they perform can give us a glimpse of the current sentiment on the Croatian financial market.

In July, the NAV amounted to HRK 1,132.3bn, which is an increase of 2.5% MoM, and 3.7% YoY. Total net contributions into the funds amounted to HRK 713.1m, or HRK 4.67bn since the beginning of the year.

Mandatory pension AUM structure change (HRKbn, January 2018 – July 2022)

The growth on the monthly basis was driven by increases across almost all of the asset classes, with bonds leading the way, increasing by HRK 1.96bn or 2.3% YoY, followed by shares with HRK 652.3m or 2.5%, investment funds, with HRK 627.5m or 4.6%, and the money market, with an increase of HRK 562.1m or 170% MoM. The only asset class to record a decline are deposits and cash, which lost HRK 382.2m or 7.3% of their value in these funds. These changes can mean several things: Firstly, the net contributions received were invested into riskier assets (as compared to deposits and cash, which are almost riskless), starting with bonds, money market, shares, and investment funds. At the same time, the fact that the value of these assets themselves increased, also influenced the MoM growth, as the month was relatively slow in terms of recovery, but a recovery nonetheless (compared to the months since the beginning of the year, and especially since the Russian invasion of Ukraine). This is also in line with the long-term investment goals of the pension funds, as the focus for the fund managers is and will remain on reducing the risk as much as possible while achieving some growth. In total, the NAV on the MoM basis increased by HRK 3.23bn.

On a YoY basis, the story is also pretty similar. NAV in this sense increased by HRK 4.76bn, driven by increases in bond holdings, which increased by HRK 3.48bn, or 4.2%, followed by shares, with an increase of HRK 1.03bn, or 4%, and investment funds, with an increase of HRK 749.3m or 5.5%. On the other hand, the money market holdings decreased by HRK 427.9m, or 32% YoY, while deposits and cash decreased by HRK 130.4m, or 2.6% YoY.

Looking at the asset structure of the pension funds, bond holdings are still the vast majority of holdings, accounting for 64.6% (or HRK 85.5bn) of the total, an increase of 0.5 p.p. YoY, but a decrease of 0.1 p.p. MoM. Following them, we have shares, with 20.3% of the total, increasing by 0.1 p.p. YoY, while remaining on similar levels on a MoM basis. Lastly, we have investment funds, which accounted for 10.8% of the total holdings, which is an increase of 0.2 p.p. YoY, and 0.22 p.p. MoM.

Current mandatory pension funds AUM (July 2022, %)

It’s also worth dividing the mandatory pension funds’ holdings into domestic and foreign (both for bonds and equity), as that can give us a glimpse into what they are investing. Starting off with bonds, domestic bond holdings account for 92.75% of all bond holdings, representing a decrease of 0.71 p.p. MoM, while at the same time, foreign bond holdings increased by the same amount, ending the month at 7.25%. Meanwhile, domestic equity holdings accounted for 61.2% of the total equity holdings, a decrease of 1.38 p.p. MoM, while foreign equity holdings accounted for the remaining 38.8%.

In H1 2022, Romgaz recorded an increase in revenue of 233% YoY, an EBITDA increase of 84%, and a net income of RON 1.72bn, an increase of 126% YoY.

As Romgaz published their H1 2022 results recently, we decided to bring you a brief analysis of the results. During the first half of the year, the gross gas production amounted to 2,515.1 m³, representing a decrease of 0.2% YoY. The high natural gas production was supported by the optimization of gas field exploitation, ongoing rehabilitation projects of main mature gas fields, but also well workover operations at wells with low productivity or inactive wells. In fact, natural gas consumption in Romania amounted to 63.35 TWh, app. 13% lower YoY, of which 18.27 TWh were import gas, and 45.08 TWh was domestic production. Romgaz delivered 27.56 TWh, representing 43.35% of the national consumption and 61.4% of the consumption covered with gas from domestic production. Meanwhile, Romgaz’s electricity production amounted to 544.7 GWh, up by 168% YoY, allowing Romgaz to achieve a market share of 1.95%.

Romgaz’s revenue increased by 233% YoY, and amounted to RON 7.49bn, as a result of higher revenue from gas sales (+240% YoY) and higher revenue from electricity sales (11.6x YoY). At the same time, total expenses also increased, growing by 309% YoY, and amounting to RON 5.55bn. The increase was driven by higher royalty expenses (+400% YoY), as well as the windfall tax (+17x) YoY. Furthermore, an additional tax on revenues from the sale of electricity was introduced in 2022, in the amount of RON 62.8m. As a result of higher revenue growth, the EBITDA was also positively influenced, amounting to RON 2.18bn, an increase of 84% YoY.

Finally, the Company’s net profit amounted to RON 1.73bn, representing an increase of 126% YoY. Investments during H1 2022 amounted to RON 217.7m, which is 55% of the scheduled investments for the H1, without the Neptun Deep project contribution. For 2022, the Company plans RON 5.72bn of investments, out of which 4.82bn will be allocated for Neptun Deep.

Romgaz key financials (H1 2021 vs. H1 2022, RONm)

Moving on to the balance sheet, total assets increased by 31.7% YTD and amounted to RON 14.9bn. This growth was driven by the increase in current assets, which grew by 66.6% YTD. Breaking this down further, in the current assets category, trade receivables increased by 13.9% YTD, mainly as a result of higher prices in 2022. Cash and cash equivalents increased by 79% YTD and amounted to RON 7.17bn. A part of this increase was generated by the cash obtained through the loan contracted for acquiring ExxonMobil Exploration and Production Romania Limited shares. Finally, other assets increased by 739.7% YTD, and amounted to RON 502.7m, as a result of the payment during Q2 2022 of the advance for the acquisition of the above-mentioned shares.

Equity increased by 3.3% YTD, mainly due to higher profit achieved in H1 2022. Liabilities increased by 142% YTD, and amounted to RON 5.59bn, with growth recorded on both the current and non-current liabilities side. Non-current liabilities increased by 133% YTD, as a result of the above-mentioned loan. Current liabilities increased by 146.7% YTD, mainly as a result of higher contract liabilities, current income tax liabilities, and other short-term liabilities.

Here you can find the dates for the upcoming events of the regional companies.

Due to the nature of these events, they are subject to change (might be postponed or canceled).