15.05.2009
Financial Performance of Tire Company Dębica S.A.
<b style=""><span lang="EN-US" style="font-size: 12pt;">In Q1 2009 Tire Company Dębica S.A. generated PLN 25.2 million of operating profit (EBIT),<span style=""> </span>which was up by 12.9 percent compared to the same period of the previous year. This positive result the Company achieved mainly due to gross profit from sales to related entities in the Goodyear Group, which was up by PLN 27.6 million</span></b><span lang="EN-US" style="font-size: 12pt;">. <b style="">Operational activities generated positive cash flows amounting to PLN 54.0 million. T.C. Dębica SA has maintained high financial liquidity combined with low debt level, with net debt/EBITDA ratio at the level of 0.49. </b></span>
Tire Company Dębica S.A. generated higher sales revenues by 2.9 percent on a year-to-year basis up to PLN 384 million, thanks to higher sales to related entities within the Goodyear Group, which was up by 6 percent, which fully offset 12.1 percent decline in sales to non-related entities. Margin on sales to related entities rose up to 16.9%, while the margin leveling off principle continued to be applied. Margin on sales to non-related entities amounted to 25.7% and remained flat. Consequently gross margin was up by 58% to reach PLN 70 million, thanks to the improvement of gross profit from related entities.
The cost of sales and general management was up by 1.5%, which was below the inflation rate, despite pressure exerted by the Polish currency depreciation on the transport costs and regional charges to Goodyear’s regional service center.
Due to stoppages at production department in Q1 2009 the costs of non-utilized production capacity reached PLN 15.7 million. These costs plus restructuring costs of PLN 4.7 million and revaluation costs of the stock of finished goods of PLN 2.2 million led to negative result on other operating activities amounting to PLN 22.7 million.
Operating profit (EBIT) was up by 12.9% to reach PLN 25 million, which should be regarded as good performance under current market circumstances.
Tire Company Dębica S.A. recorded a loss of PLN 7 million on financial activities, mainly due to higher revaluation costs of embedded derivatives (long-term purchase contracts for natural gas and distribution center lease contract, denominated in foreign currencies).
As a result of accounting losses on financial activities gross profit in Q1 2009 amounted to PLN 18.2 million and was down by 24.4 percent compared to the same period of the previous year. Net profit amounted to PLN 14.6 million and was down to the same extent as gross profit.
The export sales amounted to PLN 256.7 million and was up by 66.9 percent of the total sales of Tire Company Dębica S.A in Q1 2009. Domestic sales amounted to PLN 127.3 million in value terms, and 54.3 percent share in domestic sales was held by Goodyear Dunlop Tires Polska. Total sales to related entities accounted for 84.7 percent in value terms and for 86.6 percent in tonnage terms (in the previous year these shares were 82.1 and 84.5 percent accordingly).
The unit manufacturing costs were up by 23.2 percent, which was fuelled by a 25.5 percent increase of manufacturing costs, mainly due to stoppages at production department and by cost of raw materials that was up by 22.1 percent.
In Q1 2009 the revaluation of the embedded derivatives generated a cost amounting to PLN 10.7 million, whereas in the same period of 2008 it generated income of PLN 2.1 million. The Company revaluates on a monthly basis the embedded derivatives which comprise euro and US dollar exchange rates applied in long-term lease contracts for equipment and real properties.
Foreign exchange gains amounted to PLN 6.7 million, which was up by PLN 4.3 million compared to Q1 of the previous year. The loan interest expense was up by PLN 0.6 million and reached the amount of PLN 1.8 million. The costs of discount of bills of exchange were down by PLN 0.4 million.
In Q1 2009 the Company fixed assets were up by 7.2 million. The current assets were down by PLN 31.4 million. The inventory in value terms was down by PLN 24.5 million, whereas the receivables were up by PLN 6.5 million, while short-term financial assets were down by PLN 13.4 million. The liabilities went down by PLN 38.7 million including overdraft facilities were down by PLN 28.3 million, whereas other liabilities and provisions were down by PLN 10.5 million.
Company’s equity was up, which was fuelled by a net profit generated in Q1 in the amount of PLN 14.6 million.
In Q1 2009 the operational activities generated positive cash flows amounting to PLN 54.0 million. Capital expenditures amounted to PLN 34.3 million. The overdraft facility was down by PLN 28.3 million. The interest expense was PLN 1.8 million, whereas lease payments amounted to PLN 0.4 million.
The cost of sales and general management was up by 1.5%, which was below the inflation rate, despite pressure exerted by the Polish currency depreciation on the transport costs and regional charges to Goodyear’s regional service center.
Due to stoppages at production department in Q1 2009 the costs of non-utilized production capacity reached PLN 15.7 million. These costs plus restructuring costs of PLN 4.7 million and revaluation costs of the stock of finished goods of PLN 2.2 million led to negative result on other operating activities amounting to PLN 22.7 million.
Operating profit (EBIT) was up by 12.9% to reach PLN 25 million, which should be regarded as good performance under current market circumstances.
Tire Company Dębica S.A. recorded a loss of PLN 7 million on financial activities, mainly due to higher revaluation costs of embedded derivatives (long-term purchase contracts for natural gas and distribution center lease contract, denominated in foreign currencies).
As a result of accounting losses on financial activities gross profit in Q1 2009 amounted to PLN 18.2 million and was down by 24.4 percent compared to the same period of the previous year. Net profit amounted to PLN 14.6 million and was down to the same extent as gross profit.
The export sales amounted to PLN 256.7 million and was up by 66.9 percent of the total sales of Tire Company Dębica S.A in Q1 2009. Domestic sales amounted to PLN 127.3 million in value terms, and 54.3 percent share in domestic sales was held by Goodyear Dunlop Tires Polska. Total sales to related entities accounted for 84.7 percent in value terms and for 86.6 percent in tonnage terms (in the previous year these shares were 82.1 and 84.5 percent accordingly).
The unit manufacturing costs were up by 23.2 percent, which was fuelled by a 25.5 percent increase of manufacturing costs, mainly due to stoppages at production department and by cost of raw materials that was up by 22.1 percent.
In Q1 2009 the revaluation of the embedded derivatives generated a cost amounting to PLN 10.7 million, whereas in the same period of 2008 it generated income of PLN 2.1 million. The Company revaluates on a monthly basis the embedded derivatives which comprise euro and US dollar exchange rates applied in long-term lease contracts for equipment and real properties.
Foreign exchange gains amounted to PLN 6.7 million, which was up by PLN 4.3 million compared to Q1 of the previous year. The loan interest expense was up by PLN 0.6 million and reached the amount of PLN 1.8 million. The costs of discount of bills of exchange were down by PLN 0.4 million.
In Q1 2009 the Company fixed assets were up by 7.2 million. The current assets were down by PLN 31.4 million. The inventory in value terms was down by PLN 24.5 million, whereas the receivables were up by PLN 6.5 million, while short-term financial assets were down by PLN 13.4 million. The liabilities went down by PLN 38.7 million including overdraft facilities were down by PLN 28.3 million, whereas other liabilities and provisions were down by PLN 10.5 million.
Company’s equity was up, which was fuelled by a net profit generated in Q1 in the amount of PLN 14.6 million.
In Q1 2009 the operational activities generated positive cash flows amounting to PLN 54.0 million. Capital expenditures amounted to PLN 34.3 million. The overdraft facility was down by PLN 28.3 million. The interest expense was PLN 1.8 million, whereas lease payments amounted to PLN 0.4 million.