28.02.2011
Financial Performance of Tire Company Dębica S.A. in 2010
In 2010 Tire Company Dębica S.A. generated a net profit of PLN 81.9 million. The net profit was up by 13.7 per cent on a year-to-year basis mainly due to the higher sales volume of tires (up by 21.6 per cent) to the Goodyear Group related entities. In the overall 2010 the sales revenues totaled PLN 1 889.7 million and were up by 26 per cent in comparable terms.
The annual net profit was influenced positively by Tire Company Dębica S.A. performance in the last quarter of previous year, which was closed by the Company with a net profit of PLN 21.2 million, up by 18.0 per cent compared to the same period in 2009. In Q4 2010 sales revenues totaled PLN 513.6 million, which in comparable terms implies a rise by 48.1 per cent on a year-to-year basis.
”Profit that we generated in 2010 was mainly due to our presence in the Goodyear Group, which is our major customer buying tires we produce” – says Jacek Pryczek, the President of Management Board of Tire Company Dębica S.A. ”Despite rising costs of raw materials – especially of rubber – and a decline of profitability of tires sold in the domestic market, higher sales to the Goodyear Group entities at higher unit prices enabled us to close last year with a satisfactory result” – emphasizes Jacek Pryczek.
In 2010 the export sales accounted for 71.9 per cent of sales revenues generated by Tire Company Dębica S.A., of which 99.3 percent was sold to the Goodyear Group related entities. In 2010 84.8 per cent of both domestic and export sales was sold to the Goodyear Group related entities (in Q4 – 83.4 per cent). Consequently in 2010 the sales revenues from related entities were up by 29.7 per cent (in Q4 2010 up by 52.5 per cent), which was paralleled by a 1.9 per cent decline in comparable terms of revenues from the Goodyear Group non-related entities. The growth rate of sales to the non-related entities improved in the last quarter of the previous year reaching 9.6 per cent on a year-to-year basis in comparable terms.
In Q4 last year the gross profit on sales to the Goodyear Group related entities totaled PLN 53.3 million (accounted for 84.1 per cent of the total gross profit from sales) and it was up by 48.6 per cent compared to the same period in 2009. In comparable quarters the total gross profit on sales to non-related entities fell by 4.7 per cent and totaled PLN 10.1 million. In the overall 2010 gross profit on sales totaled PLN 216.8 million, down by 1.7 per cent compared to 2009. On transactions with related entities a 3 per cent growth on a year-to-year basis was recorded in parallel to a 15.3 per cent decline on transactions with non-related entities.
Compared to Q4 2009 the unit production costs of products sold in the last quarter of 2010 went up by 13.9 per cent, and in the overall 2010 by 8.7 per cent due to the raw material price hikes in global markets. The unit production costs would have been much higher, if not cost savings in non-raw material categories of production costs.
In the last quarter of 2010 the costs of sales and general management totaled PLN 29.0 million. Compared to the same period in 2009 their share in sales in value terms fell from 6.0 to 5.7 per cent. In the overall 2010 these costs totaled PLN 95.6 million and accounted for 5.1 per cent of the sales in value terms compared to 5.7 per cent in 2009.
Other operating income improved by PLN 25 million on a year-to-year basis, which totaled minus PLN 10.8 million in 2010 (minus PLN 5.0 million in Q4). In 2010 no costs of underutilized production capacity was recorded, which amounted to PLN 22.4 million in 2009.In 2010 the restructuring costs were down by PLN 4.5 million than in the previous year, whereas the costs of fixed assets liquidation were up by PLN 2.3 million.
In 2010 the Company generated operating profit (EBIT) of PLN 110.4 million and it was up by 7.3 per cent on a year-to-year basis. In the last quarter of 2010 EBIT totaled PLN 29.3 million and was up by PLN 4.2 million i.e. up by 16.9 per cent compared to the same period last year. In 2010 the operating profit could grow only due to gross profit on sales to the related entities that was up by PLN 17.4 million (gross profit on sales to non-related entities was down by PLN 0.5 million).
In 2010 the financial activity income of Tire Company Dębica S.A. compared to the previous year was up by PLN 4.7 million and totaled minus PLN 8.5 million (in Q4 2010 minus PLN 3.0 million against minus PLN 2.6 million in Q4 2009).The foreign exchange losses amounting to PLN 2.2 million in 2010 were down by 2.7 million compared to 2009. The revaluation of embedded derivatives – similarly to the previous year – generated a loss of PLN 0.5 million compared to PLN 0.1 million in 2009. Interest on loan and bill of exchange discount expenses totaled PLN 5.5 million and were down by PLN 3.2 million compared to 2009. Other financial costs were up by PLN 0.8 million.
Last year Tire Company Dębica S.A. and its compound supplier modified their settlement principles. Previously raw materials commissioned for processing remained Company property, whereas now the raw materials are sold and finished rubber compounds are purchased by the Company. The sales of raw materials necessary for manufacturing of rubber compounds boosted sales of commodities and materials in Q4 2010 by PLN 50.4 million and in the overall 2010 – by PLN 94.6 million. By the same amount rose the value of the commodities and materials sold and it was neutral to the amount of gross profit and Company profit.
IN 2010 the Company’s total assets were up by PLN 244.4 million. Tangible fixed assets in Q4 2010 were up by PLN 14.3 million, whereas in the overall 2010 they rose by PLN 4.0 million. The was the result of executed capital expenditures (PLN 70.0 million) and leasing of fixed assets (PLN 2.9 million), accrued depreciation (PLN 64.3 million) as well as sales and disposal (PLN 4.6 million). The deferred income tax assets were up by PLN 3.3 million, while long-term financial assets were up by PLN 0.3 million. The intangible assets were down by PLN 0.7 million.
In Q4 2010 the value of Company current assets was up by PLN 25.0 million, whereas in the overall 2010 – up by PLN 237.4 million. The inventory value was up by PLN 68.8 million, whereas the receivables was up by PLN 193.5 million. Cash and other cash assets were down by PLN 24.7 million.
In 2010 the Company equity was up by PLN 19.8 million. The equity was increased by 2010 net profit totaling PLN 81.9 million, however, 2009 dividend amounting to PLN 62.1 million was deducted from equity. Current account overdraft facility liabilities were up by PLN 5.7 million, whereas the provisions for liabilities were up by PLN 2.2 million The trade payables went up by PLN 216.7 million. All trade payables are paid at maturity.
In Q4 2010 the net operational cash flows were positive and totaled PLN 82.8 million. In total the investment activity cash flows were negative and totaled PLN (25.8) million, while the financial activity cash flows were negative and totaled PLN (92.2) million In Q4 2010 the net cash flows were negative and totaled PLN 35.2 million.
In the overall 2010 the operational activities generated positive cash flows amounting to PLN 102.2 million. Capital expenditures totaled PLN 70.7 million, whereas investment activity revenues amounted to PLN 2.8 million, while net investment activity cash flows were negative and totaled PLN (67.9) million. The financial activity cash flows were negative and amounted to PLN (61.7) million. In 2009 dividend payment to shareholders the total amount of PLN 62.1 million was paid, interest expense was PLN 3.4 million, lease payments amounted to PLN 1.8 million. The higher amount was drawn from current account overdraft facility in the amount of PLN 5.7. In 2010 the net cash flows were negative and totaled PLN 27.4 million. In 2010 the opening balance of cash was PLN 73.6 million, whereas the cash closing balance was PLN 46.2 million at the year end.
”Profit that we generated in 2010 was mainly due to our presence in the Goodyear Group, which is our major customer buying tires we produce” – says Jacek Pryczek, the President of Management Board of Tire Company Dębica S.A. ”Despite rising costs of raw materials – especially of rubber – and a decline of profitability of tires sold in the domestic market, higher sales to the Goodyear Group entities at higher unit prices enabled us to close last year with a satisfactory result” – emphasizes Jacek Pryczek.
In 2010 the export sales accounted for 71.9 per cent of sales revenues generated by Tire Company Dębica S.A., of which 99.3 percent was sold to the Goodyear Group related entities. In 2010 84.8 per cent of both domestic and export sales was sold to the Goodyear Group related entities (in Q4 – 83.4 per cent). Consequently in 2010 the sales revenues from related entities were up by 29.7 per cent (in Q4 2010 up by 52.5 per cent), which was paralleled by a 1.9 per cent decline in comparable terms of revenues from the Goodyear Group non-related entities. The growth rate of sales to the non-related entities improved in the last quarter of the previous year reaching 9.6 per cent on a year-to-year basis in comparable terms.
In Q4 last year the gross profit on sales to the Goodyear Group related entities totaled PLN 53.3 million (accounted for 84.1 per cent of the total gross profit from sales) and it was up by 48.6 per cent compared to the same period in 2009. In comparable quarters the total gross profit on sales to non-related entities fell by 4.7 per cent and totaled PLN 10.1 million. In the overall 2010 gross profit on sales totaled PLN 216.8 million, down by 1.7 per cent compared to 2009. On transactions with related entities a 3 per cent growth on a year-to-year basis was recorded in parallel to a 15.3 per cent decline on transactions with non-related entities.
Compared to Q4 2009 the unit production costs of products sold in the last quarter of 2010 went up by 13.9 per cent, and in the overall 2010 by 8.7 per cent due to the raw material price hikes in global markets. The unit production costs would have been much higher, if not cost savings in non-raw material categories of production costs.
In the last quarter of 2010 the costs of sales and general management totaled PLN 29.0 million. Compared to the same period in 2009 their share in sales in value terms fell from 6.0 to 5.7 per cent. In the overall 2010 these costs totaled PLN 95.6 million and accounted for 5.1 per cent of the sales in value terms compared to 5.7 per cent in 2009.
Other operating income improved by PLN 25 million on a year-to-year basis, which totaled minus PLN 10.8 million in 2010 (minus PLN 5.0 million in Q4). In 2010 no costs of underutilized production capacity was recorded, which amounted to PLN 22.4 million in 2009.In 2010 the restructuring costs were down by PLN 4.5 million than in the previous year, whereas the costs of fixed assets liquidation were up by PLN 2.3 million.
In 2010 the Company generated operating profit (EBIT) of PLN 110.4 million and it was up by 7.3 per cent on a year-to-year basis. In the last quarter of 2010 EBIT totaled PLN 29.3 million and was up by PLN 4.2 million i.e. up by 16.9 per cent compared to the same period last year. In 2010 the operating profit could grow only due to gross profit on sales to the related entities that was up by PLN 17.4 million (gross profit on sales to non-related entities was down by PLN 0.5 million).
In 2010 the financial activity income of Tire Company Dębica S.A. compared to the previous year was up by PLN 4.7 million and totaled minus PLN 8.5 million (in Q4 2010 minus PLN 3.0 million against minus PLN 2.6 million in Q4 2009).The foreign exchange losses amounting to PLN 2.2 million in 2010 were down by 2.7 million compared to 2009. The revaluation of embedded derivatives – similarly to the previous year – generated a loss of PLN 0.5 million compared to PLN 0.1 million in 2009. Interest on loan and bill of exchange discount expenses totaled PLN 5.5 million and were down by PLN 3.2 million compared to 2009. Other financial costs were up by PLN 0.8 million.
Last year Tire Company Dębica S.A. and its compound supplier modified their settlement principles. Previously raw materials commissioned for processing remained Company property, whereas now the raw materials are sold and finished rubber compounds are purchased by the Company. The sales of raw materials necessary for manufacturing of rubber compounds boosted sales of commodities and materials in Q4 2010 by PLN 50.4 million and in the overall 2010 – by PLN 94.6 million. By the same amount rose the value of the commodities and materials sold and it was neutral to the amount of gross profit and Company profit.
IN 2010 the Company’s total assets were up by PLN 244.4 million. Tangible fixed assets in Q4 2010 were up by PLN 14.3 million, whereas in the overall 2010 they rose by PLN 4.0 million. The was the result of executed capital expenditures (PLN 70.0 million) and leasing of fixed assets (PLN 2.9 million), accrued depreciation (PLN 64.3 million) as well as sales and disposal (PLN 4.6 million). The deferred income tax assets were up by PLN 3.3 million, while long-term financial assets were up by PLN 0.3 million. The intangible assets were down by PLN 0.7 million.
In Q4 2010 the value of Company current assets was up by PLN 25.0 million, whereas in the overall 2010 – up by PLN 237.4 million. The inventory value was up by PLN 68.8 million, whereas the receivables was up by PLN 193.5 million. Cash and other cash assets were down by PLN 24.7 million.
In 2010 the Company equity was up by PLN 19.8 million. The equity was increased by 2010 net profit totaling PLN 81.9 million, however, 2009 dividend amounting to PLN 62.1 million was deducted from equity. Current account overdraft facility liabilities were up by PLN 5.7 million, whereas the provisions for liabilities were up by PLN 2.2 million The trade payables went up by PLN 216.7 million. All trade payables are paid at maturity.
In Q4 2010 the net operational cash flows were positive and totaled PLN 82.8 million. In total the investment activity cash flows were negative and totaled PLN (25.8) million, while the financial activity cash flows were negative and totaled PLN (92.2) million In Q4 2010 the net cash flows were negative and totaled PLN 35.2 million.
In the overall 2010 the operational activities generated positive cash flows amounting to PLN 102.2 million. Capital expenditures totaled PLN 70.7 million, whereas investment activity revenues amounted to PLN 2.8 million, while net investment activity cash flows were negative and totaled PLN (67.9) million. The financial activity cash flows were negative and amounted to PLN (61.7) million. In 2009 dividend payment to shareholders the total amount of PLN 62.1 million was paid, interest expense was PLN 3.4 million, lease payments amounted to PLN 1.8 million. The higher amount was drawn from current account overdraft facility in the amount of PLN 5.7. In 2010 the net cash flows were negative and totaled PLN 27.4 million. In 2010 the opening balance of cash was PLN 73.6 million, whereas the cash closing balance was PLN 46.2 million at the year end.