Earnings Report /
Croatia

AD Plastik Group: Strong Wind Blowing in the Wrong Direction

  • In H1 AD Plastik Group recorded a drop in sales revenue of 29.8% YoY, amounting to HRK 425.7m

  • In H1 EBITDA was down from HRK 82.5m to HRK -56.4m YoY, primarily due to mentioned lower sales

  • Finally, AD Plastik’s bottom line is down from HRK 32.4m to HRK -59.4 YoY, mostly due to lower sales

Tea Pevec
Tea Pevec

Head of Research

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InterCapital
8 August 2022
Published byInterCapital

In H1 AD Plastik Group recorded a drop in sales revenue of 29.8% YoY, amounting to HRK 425.7m. This is the result of a few factors: ongoing semiconductor shortage, supply chain problems, increase in input prices and the Russian invasion of Ukraine combined with economic uncertainty. Due to the geopolitical situation, most western car manufacturers and Russian car manufacturers have stopped their production activities. This, consequently, forced their suppliers to do the same, as their input products have no end-user, resulting in lower sales for AD Plastik. For the second half of the year, the start of part of the production is announced, but due to the current situation full of uncertainties, a high caution regarding planning should be considered.

Meanwhile, there is a still-present semiconductor shortage that has not been fully resolved yet, resulting in lower car production of certain car manufacturers due to lower production capacities.

In H1 EBITDA was down from HRK 82.5m to HRK -56.4m YoY, primarily due to mentioned lower sales. Operating expenses decreased by 8.5%, driven by a decrease in material costs, amounting to HRK 292m (-23.6% YoY). Furthermore, staff costs decreased by 14.3% YoY, amounting to HRK 108.8m. Nevertheless, AD Plastik reported a negative trend in all profitability margins, with EBITDA margin decreasing by 26.9 p.p., amounting to -13.3%. As mentioned, lower profitability margins were a direct result of lower sales.

Below the operating line, the net financial result significantly improved and slightly offset profitability decrease, due to FX gain amounting to HRK 24.4m, as the Russian ruble appreciated strongly in the second quarter. Finally, AD Plastik’s bottom line is down from HRK 32.4m to HRK -59.4 YoY, mostly due to lower sales. Turning our attention to the balance sheet, AD Plastik’s net debt amounted to HRK 183.5m (a decrease of 14.7% since the beginning of the year). AD Plastik emphasized its current financial position nevertheless remained stable.

Overall, we conclude that production cessation occurring due to the Russian invasion of Ukraine will continue to affect the results in the following quarters and could prolong. Due to the uncertain political and economic situation, the pressure on the share could continue in the next period so the short-term outlook remains uncertain.