Earnings Report /
Croatia

AD Plastik Group: Solid Q1 as Covid-19 effects yet to show

  • In Q1 20, the AD Plastik Group recorded an 0.8% yoy increase in sales

  • Q1 20 EBITDA amounted to HRK62.7mn, which represents a 36.3% yoy growth

  • AD Plastik’s bottom line increased by 1.1% yoy to HRK28.2mn

InterCapital
29 April 2020
Published byInterCapital

In Q1 20 the AD Plastik Group recorded an 0.8% YoY increase in sales. The growth in sales was enabled by the serial production of several vehicles, ie the redesigned Twingo and Smart, the new Clio 5 and Ford Puma, which started last year. Meanwhile other revenues recorded a positive one-off effect as AD Plastik sold their non-operating fixed assets in Makarska for HRK 11.4m. When breaking down operating revenue by markets, the EU & Serbian market recorded sales in the amount of HRK 286.2, which represents a 3.2% YoY increase. The crisis caused by the Covid-19 had a significant impact on the car industry in the EU, and in March, a decrease of 55.1% of newly registered vehicles was recorded, or 25.6% at the level of the first three months of 2020. However, one should highlight that despite these negative trends AD Plastik was able to secure new deals worth EUR9.4mn with the PSA Group. Meanwhile the Russian market recorded sales to the amount of HRK76.4mn, which represents a 7.4% YoY increase. Revenue growth was largely the result of higher revenue from the sales of tools compared to the same period last year. The consequences of the crisis caused by the Covid-19 pandemic are also evident in this market, but with a smaller time lag compared to the movements of the EU markets. Thus, the number of newly registered cars increased by 1.8% in the reporting period, and in March it increased by as much as 4%. New deals signed in this market amounted to EUR22.4mn for the Renault-Nissan-AvtoVAZ Alliance, namely for Renault Sandero, Logan and Lada Granta vehicle models. 

Q1 20 EBITDA amounted to HRK62.7mn, which represents a 36.3% YoY growth. Along with higher profitability of new projects, EBITDA growth was significantly affected by revenue from the sale of non-operating assets and a government subsidy to preserve jobs in the amount of HRK7.3mn.

Below the operating line, the net financial result plummeted amounting to -HRK15.1mn (from HRK0.84mn in Q1 19). The deterioration was caused by negative FX results stemming from the Russian ruble and the Hungarian forint, which both weakened significantly against the euro. Income from associates plummeted, amounting to HRK 5.5m (-46% YoY). Finally, AD Plastik’s bottom line increased by 1.1% YoY to HRK28.2mn.

On the balance sheet, AD Plastik was able to significantly reduce their net debt since the beginning of the year to HRK360.1mn (-18.3%). This translates to a net debt/EBITDA ratio of 1.68x. Note that the decrease can largely be attributed to the funds received from the sale of real estate in Makarska and funds received from tools sales.

AD Plastik posted solid results in Q1 20, however as we expect the impact of Covid-19 to be revealed in later quarters, we will revisit our current assumptions. Thus, we keep our target price Under Review.