Earnings Report /
Croatia

AD Plastik Group: Profitability margins on a downtrend

  • In Q1 AD Plastik Group recorded a drop in sales revenue of 24% YoY

  • In FY 2021, AD Plastik generated 27% of the total Group’s revenues in Russia

  • In Q1 EBITDA was down 52.9% YoY as a decrease in sales negatively influenced Group’s profitability

Tea Pevec
Tea Pevec

Head of Research

InterCapital
3 May 2022
Published by

In Q1 AD Plastik Group recorded a drop in sales revenue of 24% YoY. This is the result of the stoppage of production in Russia, as car manufacturers in that market have stopped their production activities because of the Russian invasion of Ukraine and economic uncertainty. The European factories of AD Plastik Group have been working according to plans, although due to the lack of semiconductors, the customers’ production capacities were reduced. In FY 2021, AD Plastik generated 27% of the total Group’s revenues in Russia. As the political situation is unstable as it gets, basically a third of AD Plastik’s revenues come in question. Although Group’s factories are ready to resume production in Russia, the company cannot predict when the production will restart. On top of that, the Russian ruble reported a robust depreciation in the FX market in the last quarter– meaning that even realized revenues in Russia might not be “worth” the full value. In the last two months, the Russian ruble stabilized on the open FX market due to Putin’s ultimatum for natural gas to be bought strictly with the ruble. Nevertheless, the “real” currency exposure can be much higher due to spreads, so the market exchange rate EUR/RUB cannot always be effectuated. Semiconductor shortage due to disruptions in the supply chain has resulted in producers slowing down vehicle production, which has in turn negatively influenced the production of spare parts and sales of AD Plastik. Therefore, total revenue in Q1 was down 23% YoY.

In Q1 EBITDA was down 52.9% YoY as a decrease in sales negatively influenced Group’s profitability, while the EBITDA margin was down 620 bp amounting to 9.8%. Below the operating line, the net financial result worsened significantly due to FX loss amounting to HRK 6.4m, as the Russian ruble depreciated in the reporting period. Finally, AD Plastik’s bottom line is down from HRK 25.8m to HRK 0.58m (-97.9%), mostly due to lower sales and mentioned negative FX results. Turning our attention to the balance sheet, AD Plastik’s net debt amounted to HRK 310.4m (a decrease of 12.9% since the beginning of the year). This translates to a net debt/EBITDA ratio of 3.18x.