Earnings Report /
Croatia

AD Plastik Group: Top and bottom line hurt

  • In 9M AD Plastik Group recorded a drop in sales revenue of 24.9% YoY, amounting to HRK 612.1m

  • In 9M EBITDA was down from HRK 97.5m to HRK -63.4m YoY, primarily due to mentioned lower sales

  • Finally, AD Plastik’s bottom line is down from HRK 23m to HRK -87m YoY, mostly due to lower sales

Tea Pevec
Tea Pevec

Head of Research

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InterCapital
17 November 2022
Published byInterCapital

In 9M AD Plastik Group recorded a drop in sales revenue of 24.9% YoY, amounting to HRK 612.1m. 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. In the previous quarter, most western car manufacturers and Russian car manufacturers 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. In Q3 AD Plastik was primarily influenced by the geopolitical situation and its impact on the company’s operations in that region. Nevertheless, some of the competitors there have started their production – but AD Plastik still warns of caution.

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. AD Plastik emphasized its commercial activities are fully focused on the EU market at the moment.

In 9M EBITDA was down from HRK 97.5m to HRK -63.4m YoY, primarily due to mentioned lower sales. Operating expenses decreased by 5.5%, driven by a decrease in material costs, amounting to HRK 422.8m (-18% YoY). Furthermore, staff costs decreased by 11.2% YoY, amounting to HRK 161.9m. Nevertheless, AD Plastik reported a negative trend in all profitability margins, with EBITDA margin decreasing by 22.4 p.p., amounting to - 10.4%. As mentioned, lower profitability margins were a direct result of lower sales.

Below the operating line, the net financial result significantly improved on a YoY basis and slightly offset profitability decrease, due to FX gain amounting to HRK 25.3m, as the Russian ruble appreciated strongly in the second quarter. Finally, AD Plastik’s bottom line is down from HRK 23m to HRK -87m YoY, mostly due to lower sales. Turning our attention to the balance sheet, AD Plastik’s net debt amounted to HRK 280.9m (a decrease of 9.1% since the beginning of the year). AD Plastik emphasized their current financial position nevertheless remained stable and that preserving financial stability is the key goal in the current conditions.

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.