Earnings Report /
Croatia

Podravka Group: Stockpiling brings double-digit growth on all lines

  • Podravka ended Q1 20 on a strong note, as Group sales soared 20.8% yoy to HRK1.2bn

  • The Group’s EBITDA amounted to HRK 177.2mn, representing a 13.2% yoy increase

  • Net profit after minorities amounted to HRK91mn (+13.6% yoy)

InterCapital
26 May 2020
Published byInterCapital

Podravka ended Q1 20 on a strong note, as the Group’s sales soared 20.8% YoY amounting to HRK 1.2bn.

Food grew by 19.1% YoY to HRK 970.9m. Within the segment, own brands are up 20.9% YoY to HRK 915m, as a result of the increased demand for food products. The revenue growth was recorded by all business units, with the biggest absolute growth recorded by the Culinary and the Žito and Lagris business units. Meanwhile other sales are down 4.3% YoY, primarily as a result of lower sales of trade goods in some markets.

Pharma segment is up 27.7% YoY to HRK 257.9m. Own brands recorded a 25.2% YoY increase to HRK 202.9m, as a result of the increase in demand for pharmaceutical products due to the COIVD-19 pandemic. Other sales revenues are up 37.9% YoY due to higher sales of trade goods in the markets of Bosnia and Herzegovina and Croatia. 

Gross profit is up 19.1% YoY to HRK 457.2m with both segments contributing to the increase. The gross margin decreased slightly to 37.2% (from 37.7%) due to the changing sales structure which shifted more towards less profitable products in both segments and due to higher prices of raw materials and supplies in the Food segment.

The Group’s EBITDA amounted to HRK 177.2m, representing an 13.2% YoY increase. The increase came primarily as a result of the higher sales in both business segments. However, EBITDA margin fell to 14.4% (from 15.4%) due to higher costs related to the sales growth (logistics and distribution), very unfavourable movements in exchange differences on trade receivables and trade payables (HRK -33.9m Q1 2020, compared to HRK+10.6m in Q1 2019) and the increase in staff costs of HRK 11.8m(+5%). 

Below the operating line Podravka’s net financial loss doubled to HRK -9.9m. This is primarily due to less favourable movements in foreign exchange differences on borrowings, which in Q1 2020 amounted to HRK -11.5m, while in Q1 2019 amounted to HRK 0.2m. Finally, net profit after minorities amounted to HRK 91m (+13.6% YoY). 

On the balance sheet Podravka lowered their net debt by 8% since the begging of the year. As a result, net debt now amounts to HRK 756.2m, which translates to a net debt/EBITDA ratio of 1.4x.

Podravka’s strong Q1 2020 results are encouraging. However, until we adjust our model to accurately represent the new situation on the market, we keep our target price Under Review.