15.05.2013
Financial Performance of Tire Company Debica S.A. in Q1 2013
In Q1 2013 Tire Company Debica S.A. generated a net profit totaling PLN 26.0, down by 12.3 million compared to that in Q1 2012.Lower profit is a result of lower sales revenues that totaled PLN 549.3 million and were down by PLN 187.3 million. Taking into consideration a one-off sell-off of non-Debica brands for the total amount of PLN 155.1 million, which took place in Q1 2012, sales was down by PLN 32.2 million. In comparable terms the sales revenues are down 5.5 per cent on a year-to-year basis due to shrinking market potential
In Q1 2013 Tire Company Debica S.A. generated a net profit totaling PLN 26.0, down by 12.3 million compared to that in Q1 2012.Lower profit is a result of lower sales revenues that totaled PLN 549.3 million and were down by PLN 187.3 million. Taking into consideration a one-off sell-off of non-Debica brands for the total amount of PLN 155.1 million, which took place in Q1 2012, sales was down by PLN 32.2 million. In comparable terms the sales revenues are down 5.5 per cent on a year-to-year basis due to shrinking market potential.
“Growth rate of comparable performance of Tire Company Debica S.A. is significantly higher than the growth rate of industry performance. Still shrinking demand in the automotive sector, stagnation of economy in the Euro zone and lower growth rate of the Polish economy adversely affected the level of revenues and profits in the tire business including also our Company. However, Tire Company Debica S.A. is a strong company generating profits in each and every quarter, paying special attention to cost curtailment including responsible talks with the trade unions about wage growth. Furthermore the Company follows up the instigated investment projects boosting its production capacity in the most profitable market segments i.e. in high performance tire (HP) and truck tire segments. Therefore I am convinced that thanks to decisions currently taken the Company will achieve even higher operational efficiency when the economy will be back on a growth path” – said Jacek Pryczek, the President of Management Board of Tire Company Debica S.A.
In Q1 2013 the sales to related entities totaled PLN 483.7 million and accounted for 88.1% of sales in value terms and for 88.3 % compared to the same, previous quarter. Gross profit on sales to related entities totaled PLN 43.6 million, whereas profit margin rose up to 9.0 per cent compared to 8.4 per cent in Q1 of the previous year. After the deduction of the one-off transaction in Q1 of the last year the net profit totaled PLN 39.5 million. Meanwhile gross profit on sales to non-related entities totaled PLN 10.5 million, whereas profit margin rose up to 17.2 per cent compared to 16.0 per cent on a year-to-year basis.
The costs of sales and general management totaled PLN 21.4 million i.e. they were down by 4.9 million compared to the same quarter of the last year. The share of these costs in sales revenues accounted for 3.9 per cent compared to 3.6 per cent on a year-to-year basis.
The other operating net income was negative and totaled minus PLN 0.4 million and was up by PLN 0.7 million compared to the first quarter (Q1) of the last year. In current quarter the proceeds from sale of fixed assets are up by PLN 0.2 million, whereas costs of bad debts are down by PLN 0.9 million. The costs of inventory revaluation are up by PLN 0.5 million.
Operating profit (EBIT) totaled PLN 32.3 million i.e. it was down by PLN 9.6 million on a year-to-year basis, and netted off transactions in Q1 last year the operating profit in Q1 last year was PLN 27.0 million. The margin ratio rose to 5.9., compared to 5.7 per cent in the first quarter (Q1) of 2012, whereas netted off a one-off transaction the margin in comparable period would be equal to 4.6 per cent.
Financial activity gains totaled PLN 0.1 million, which was down by PLN 5.7 million compared to the first quarter (Q1) of 2012. The foreign exchange gains totaled PLN 0.2 million, i.e. down by PLN 2.5 million and no gains were recorded from the revaluation of embedded derivatives, which in the first quarter (Q1) of the last year totaled PLN 4.9 million. Superior performance was recorded in the category interest income on idle cash, whereas interest expense related to the loan and bill of exchange discount was down – by PLN 0.9 and PLN 0.7 million respectively.
The gross profit in Q1 2013 totaled PLN 32.4 million and was down by PLN 15.3 million, compared to the same quarter of 2012. Netted off transactions, it is down by PLN 0.4 million.Net profit totaled PLN 26.0 million, down by 32.0% per cent on a year-to-year basis. Netted off inventory sales transaction, the net profit in Q1 2012 totaled PLN 26.2 million.
At the end of March 2013 the fixed assets totaled PLN 783.9 million and were up by 18.2 million in the first quarter (Q1) due to the investment projects underway. The capital expenditures amounted to PLN 36.5 million, whereas the depreciation of existing fixed assets totaled PLN 18.3 million.
Meanwhile the Company’s current assets totaled PLN 711.5 million and were up by PLN 85.2 million. Short-term receivables totaled PLN 465.6 million and were up in the first quarter (Q1) of 2013 by PLN 142.2 million, which is a result of the adopted tire sales crediting policy.
The short-term financial assets totaled PLN 120.1 million and were down by 64.7 million in the first quarter (Q1).Cash and other cash assets were down by PLN 76.5 million, whereas other short-term financial assets (bills of exchange received from customers) were up by PLN 11.8 million. The short-term prepayments were up by PLN 3.4, of which PLN 2.8 million was in relation to the social fund. The Company’s total assets were up by PLN 103.4 million.
At the end of March 2013 the liabilities and provisions for liabilities totaled PLN 603.1 million and were up by 77.4 million in the first quarter (Q1) of 2013. The provisions for liabilities were down by PLN 5.9 million. In relation to the employee benefits (annual bonus payment) they were down by PLN 9.3 million. However, the provisions for liabilities were up by PLN 3.5 million owing to deferred income tax assets. Short-term liabilities vis-a-vis related entities were up by PLN 64.2 million. The liabilities vis-a-vis non-related entities were up by PLN 16.4 million. The VAT-related liabilities were up by PLN 18.9 million, whereas other liabilities were down by PLN 2.5 million. Social fund expenditures were up by 2.9 million.
In the first quarter (Q1) 2010 the Company generated negative operational cash flows in the amount of PLN 23.4 million. The investment activity cash flows were negative and totaled PLN 52.8 million. The financial activity cash flows were negative and amounted to PLN 0.7 million. The interest expense was PLN 0.1 million, whereas lease payments amounted to PLN 0.6 million. In the first quarter (Q1) 2013 the net cash flows were negative and totaled PLN 76.9 million.
In the first quarter (Q1) 2013 the cash balance fell by PLN 76.9 million from the opening balance of PLN 184.6 million at the end of 2012 to the closing balance of PLN 107.7 million at the end of March 2013.
“Growth rate of comparable performance of Tire Company Debica S.A. is significantly higher than the growth rate of industry performance. Still shrinking demand in the automotive sector, stagnation of economy in the Euro zone and lower growth rate of the Polish economy adversely affected the level of revenues and profits in the tire business including also our Company. However, Tire Company Debica S.A. is a strong company generating profits in each and every quarter, paying special attention to cost curtailment including responsible talks with the trade unions about wage growth. Furthermore the Company follows up the instigated investment projects boosting its production capacity in the most profitable market segments i.e. in high performance tire (HP) and truck tire segments. Therefore I am convinced that thanks to decisions currently taken the Company will achieve even higher operational efficiency when the economy will be back on a growth path” – said Jacek Pryczek, the President of Management Board of Tire Company Debica S.A.
In Q1 2013 the sales to related entities totaled PLN 483.7 million and accounted for 88.1% of sales in value terms and for 88.3 % compared to the same, previous quarter. Gross profit on sales to related entities totaled PLN 43.6 million, whereas profit margin rose up to 9.0 per cent compared to 8.4 per cent in Q1 of the previous year. After the deduction of the one-off transaction in Q1 of the last year the net profit totaled PLN 39.5 million. Meanwhile gross profit on sales to non-related entities totaled PLN 10.5 million, whereas profit margin rose up to 17.2 per cent compared to 16.0 per cent on a year-to-year basis.
The costs of sales and general management totaled PLN 21.4 million i.e. they were down by 4.9 million compared to the same quarter of the last year. The share of these costs in sales revenues accounted for 3.9 per cent compared to 3.6 per cent on a year-to-year basis.
The other operating net income was negative and totaled minus PLN 0.4 million and was up by PLN 0.7 million compared to the first quarter (Q1) of the last year. In current quarter the proceeds from sale of fixed assets are up by PLN 0.2 million, whereas costs of bad debts are down by PLN 0.9 million. The costs of inventory revaluation are up by PLN 0.5 million.
Operating profit (EBIT) totaled PLN 32.3 million i.e. it was down by PLN 9.6 million on a year-to-year basis, and netted off transactions in Q1 last year the operating profit in Q1 last year was PLN 27.0 million. The margin ratio rose to 5.9., compared to 5.7 per cent in the first quarter (Q1) of 2012, whereas netted off a one-off transaction the margin in comparable period would be equal to 4.6 per cent.
Financial activity gains totaled PLN 0.1 million, which was down by PLN 5.7 million compared to the first quarter (Q1) of 2012. The foreign exchange gains totaled PLN 0.2 million, i.e. down by PLN 2.5 million and no gains were recorded from the revaluation of embedded derivatives, which in the first quarter (Q1) of the last year totaled PLN 4.9 million. Superior performance was recorded in the category interest income on idle cash, whereas interest expense related to the loan and bill of exchange discount was down – by PLN 0.9 and PLN 0.7 million respectively.
The gross profit in Q1 2013 totaled PLN 32.4 million and was down by PLN 15.3 million, compared to the same quarter of 2012. Netted off transactions, it is down by PLN 0.4 million.Net profit totaled PLN 26.0 million, down by 32.0% per cent on a year-to-year basis. Netted off inventory sales transaction, the net profit in Q1 2012 totaled PLN 26.2 million.
At the end of March 2013 the fixed assets totaled PLN 783.9 million and were up by 18.2 million in the first quarter (Q1) due to the investment projects underway. The capital expenditures amounted to PLN 36.5 million, whereas the depreciation of existing fixed assets totaled PLN 18.3 million.
Meanwhile the Company’s current assets totaled PLN 711.5 million and were up by PLN 85.2 million. Short-term receivables totaled PLN 465.6 million and were up in the first quarter (Q1) of 2013 by PLN 142.2 million, which is a result of the adopted tire sales crediting policy.
The short-term financial assets totaled PLN 120.1 million and were down by 64.7 million in the first quarter (Q1).Cash and other cash assets were down by PLN 76.5 million, whereas other short-term financial assets (bills of exchange received from customers) were up by PLN 11.8 million. The short-term prepayments were up by PLN 3.4, of which PLN 2.8 million was in relation to the social fund. The Company’s total assets were up by PLN 103.4 million.
At the end of March 2013 the liabilities and provisions for liabilities totaled PLN 603.1 million and were up by 77.4 million in the first quarter (Q1) of 2013. The provisions for liabilities were down by PLN 5.9 million. In relation to the employee benefits (annual bonus payment) they were down by PLN 9.3 million. However, the provisions for liabilities were up by PLN 3.5 million owing to deferred income tax assets. Short-term liabilities vis-a-vis related entities were up by PLN 64.2 million. The liabilities vis-a-vis non-related entities were up by PLN 16.4 million. The VAT-related liabilities were up by PLN 18.9 million, whereas other liabilities were down by PLN 2.5 million. Social fund expenditures were up by 2.9 million.
In the first quarter (Q1) 2010 the Company generated negative operational cash flows in the amount of PLN 23.4 million. The investment activity cash flows were negative and totaled PLN 52.8 million. The financial activity cash flows were negative and amounted to PLN 0.7 million. The interest expense was PLN 0.1 million, whereas lease payments amounted to PLN 0.6 million. In the first quarter (Q1) 2013 the net cash flows were negative and totaled PLN 76.9 million.
In the first quarter (Q1) 2013 the cash balance fell by PLN 76.9 million from the opening balance of PLN 184.6 million at the end of 2012 to the closing balance of PLN 107.7 million at the end of March 2013.