IC Market Espresso 30 Aug 2023

Croatian GDP Increases by 2.7% YoY in Q2 2023

According to the first flash estimates, in real terms, the Croatian GDP increased by 2.7% YoY and amounted to EUR 18.8bn in Q2 2023. At the same time, seasonally adjusted quarterly GDP in real terms increased by 1.1% QoQ and 2.5% YoY.

Yesterday, the Croatian Bureau of Statistics, DZS released the estimate for Q2 2023 information on Croatian GDP. According to the estimate, Croatian GDP in real terms increased by 2.7% YoY in Q2 2023. At the same time, seasonally adjusted quarterly GDP in real terms increased by 1.1% QoQ and 2.5% YoY.

Breaking this down even further, on a YoY basis, Final consumption expenditure increased by 1.8% YoY and amounted to EUR 11.6bn. Inside this category, Households recorded growth of 2.3%, and amounted to EUR 8.7bn, while General Government recorded an increase of 0.3%, and amounted to EUR 2.9bn. Moving on, Gross fixed capital formation increased by 3.2% YoY and amounted to EUR 3.9bn. On the other hand, both the export and import of goods and services decreased, by 1.6%, and 3.6%, respectively, amounting to EUR 8bn, and EUR 8.6bn, respectively. However, if we delve into this even further, we can see that goods export and import of goods decreased, by 9.7% and 7.3%, respectively, while the export and import of services increased, by 8.3% and 23.9%, respectively.

Croatian GDP, (2007 – Q2 2023, %, YoY) *

Source: Croatian Bureau of Statistics, InterCapital Research

*Quarterly Gross Domestic Product, seasonally adjusted real growth rates

Overall, we can see that the GDP is still on a positive trajectory in Croatia, and this even includes inflation as these refer to real growth rates. Final consumption is still up, which means that despite the hit to disposable incomes, it remains one of the key drivers. Furthermore, gross fixed capital formation, which includes investments from the government also continued increasing, and considering that Croatia has access to various EU funds, this is helping to offset the negative effect of said inflation. Finally, even though the decline in the export and import of goods is negative news for any economy, Croatia has been orientated more towards services, especially in the tourism and hospitality industry. As such, the growth in both export and import of services is expected. Compared to other countries in the EU, especially the larger ones such as Germany, which are already in a technical recession, the Croatian growth data is positive. However, given its dependence on the EU, it remains to be seen if this will be the case going forward.

Span Announces Initiation of Incorporation of the Company in Georgia

Yesterday, Span announced that they have initiated the procedure for the incorporation of the company Span with headquarters in Georgia.

Span noted that this was one of their goals, as the markets of East Europe and Central Asia region are among Span’s strategic focuses. As such, this action is an additional confirmation of this, besides the already existing affiliated companies in Ukraine, Moldova, and Azerbaijan. Furthermore, Span noted that at the time when TOV Span was founded in Ukraine, the Company had received Microsoft Licensing Solution Provider (LSP) status for Georgia and Moldova.

The intention of the Company was after registering the company in Moldova, to initiate the registration of the company in Georgia as well. However, due to the COVID-19 pandemic, Russian aggression against Ukraine, and threats to Georgia, they took special caution. Span further notes that over the past few months, they’ve made quality contacts and secured everything necessary to enter the Georgian market. At the same time, Microsoft is consolidating LSP partners in many markets, including Georgia. As such, Span finds this to be the optimal moment to enter the market as an experienced medium-sized partner on a global scale.

Purcari Wineries Publishes H1 2023 Results

In H1 2023, Purcari recorded revenue growth of 30.3% YoY, an EBITDA increase of 29.3%, and a net profit of RON 12.8m, an increase of 43.8% YoY.

In total, the sales revenue amounted to RON 161.4m, representing an increase of 30.3% YoY. This came as a result of higher volumes as well as price increases. Furthermore, Core Wine revenues increased by 29% YoY, with Ecosmart contributing RON 13.2m. All of the brands were performing well in H1, with Purcari increasing the most, by 38% YoY. In terms of regions, Romania and Moldova both recorded double-digit growth, while China recorded a slowdown due to the general macroeconomic situation in the country.

Cost of sales meanwhile, increased by 45% YoY, to RON 94.5m, leading to a gross profit of RON 67m, also implying a gross profit margin of 41%, a decrease of 6 p.p. YoY. The Company does note that the normalized gross profit margin amounted to 46% (this accounts for EcoSmart and Angel Estate, both of which yield lower gross margins). The decrease in the margin came mainly as a result of higher packaging prices, as well as still a lot of expensive bulk from the 2020 and 2021 vintages. Moving on, marketing and selling expenses increased by 52% YoY and amounted to RON 19.2m, in line with the sales growth. Meanwhile, G&A expenses increased by 19% YoY and amounted to RON 17.5m.

Taken together, this led to an EBITDA of RON 44.5m, an increase of 15% YoY, which would also mean that the EBITDA margin amounted to 28%, a decrease of 4 p.p. YoY. The Company notes that the decrease in the margin came as a result of difficult global economic and geopolitical circumstances which affected the operational activity. Finally, the net profit amounted to RON 25.5m, an increase of 22% YoY, with a net profit margin of 16%, a decrease of 1 p.p. YoY.

Purcari Wineries key financials (H1 2023 vs. H1 2022, RONm)

Source: Purcari Wineries, InterCapital Research

Purcari also touched on its guidance for 2023. For the year, the Company expects revenue growth of between 18-22%, with growth in the WINE segment of between 14-18%. Furthermore, EBITDA margin is expected at 22-26%, with the net profit margin expected at 12-16%.

Upcoming Events – August 2023

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

wdt_ID Date Ticker Announcement Country
34 30.8.2023 EL Electrica Q2 2023 Results Conference Call Romania
35 30.8.2023 ONE One United Properties Q2 2023 Results Conference Call Romania
38 31.8.2023 CICG Cinkarna Celje Q2 2023 Results Slovenia
39 31.8.2023 FP Fondul Proprietatea Q2 2023 Results, Conference Call Romania
40 31.8.2023 LKPG Luka Koper Dividend Payment date Slovenia
41 31.8.2023 ZVTG Triglav Q2 2023 Results Slovenia

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