14.11.2013
Growing Revenues and Profits
Financial Performance of Tire Company Debica S.A. in Q3/2013 and for three (3) quarters of 2013 <br /> <br /> In Q3 2013 sales revenues of Tire Company Debica S.A. totaled PLN 545.1 million and were up by 2.0 per cent compared to Q3/2012. Meanwhile on a year-to-date basis (three quarters of 2013), the Company generated sales revenues totaling PLN 1 692.5 million, which were down by 7.6 per cent compared to the same period in 2012. However, in comparable terms i.e. including the impact of one-off sales of inventories of the tires under non-Debica brands for the total amount of PLN 155.1 million, which took place in the first quarter of 2013 – the sales revenues for the three quarters 2013 are up by 1.6% on a year-to-year basis.
In Q3 2013 sales revenues of Tire Company Debica S.A. totaled PLN 545.1 million and were up by 2.0 per cent compared to Q3/2012. Meanwhile on a year-to-date basis (three quarters of 2013), the Company generated sales revenues totaling PLN 1 692.5 million, which were down by 7.6 per cent compared to the same period in 2012. However, in comparable terms i.e. including the impact of one-off sales of inventories of the tires under non-Debica brands for the total amount of PLN 155.1 million, which took place in the first quarter of 2013 – the sales revenues for the three quarters 2013 are up by 1.6% on a year-to-year basis.
Net profit for three quarters 2013 totaled PLN 96.2 million, which was up by 27.2 per cent compared to three quarters of the previous year. Net profit for Q3/2013 totaled PLN 45.0 million and was up by 16.6 per cent on a year-to-year basis.
“Net profit for three quarters 2013 was up by almost 30%. The Company utilized its strong market position to take advantage of the benefits of tire market revival. Close co-operation with our strategic partner Goodyear and also improving economic situation on international arena give hope for good performance in consecutive quarters” – said Jacek Pryczek, CEO and President of Management Board of Tire Company Debica S.A.
Sales to related entities from Goodyear Group for three quarters of 2013 totaled PLN 1 384.1 million, and was up in comparable terms by 3.2 per cent on a year-to-year basis. Sales revenues in Q3 2013 totaled PLN 483.2 million and were up by 1.8 per cent on a year-to-year basis. Sales to non-related entities for three quarters of 2013 totaled PLN 179.9 million i.e. it was down by 8.1 per cent on a year-to-year basis. In Q3 2013 4.0 per cent sales growth was recorded on a year-to-year basis. Sales to related entities for 9 months of 2013 accounted for 88.5 per cent of total sales compared to 88.4 per cent in the same period of the previous year.
Gross profit from sales to related entities totaled PLN 108.7 million, whereas profit margin to revenues was up from 7.8 per cent to 7.9 per cent on a year to year basis. Meanwhile gross profit from sales to non-related entities totaled PLN 40.5 million and profit margin was down from 21.0 per cent to 22.5 per cent on a year-to-year basis.
Gross profit from total sales for 9 months of 2013 totaled PLN 149.2 million and profit margin to revenues was 9.5 per cent compared to 9.3 per cent in the same period of the previous year. An increase of gross profit margin was possible thanks to the reduction of unit production costs by 10.2 per cent and it was achieved thanks to lower material costs.
The costs of sales and general management totaled PLN 61.6 million i.e. down by PLN 1.1 million compared to three quarters of 2012. The share of these costs in total sales was up by 3.9 per cent against 3.7 per cent on a year-to-year basis.
The other operating profit (EBIT) was negative and totaled PLN 1.7 million and is up by PLN 6.0 million compared to three quarters of 2012, mainly due to the absence of costs of non-utilized production capacity, which did not occur in 2013, and their cost in 2012 was PLN 6.4 million. The cost of bad debts is down by PLN 0.4 million. Other operating costs are up PLN 0.8 million.
Operating profit (EBIT) totaled PLN 85.9 million i.e. down by PLN 1.7 million on a year to year basis, but profit margin to revenues was up to 5.5 per cent compared to 5.2 per cent in three quarters of the previous year.
In three quarters of 2013 the financial activity gains were positive and totaled PLN 4.3 million i.e. down by PLN 2.9 million compared to the same period of 2012. Meanwhile the foreign exchange (FX) gains totaled PLN 5.3 million, up by 1.2 per cent compared to the same period in the previous year, whereas gains from the revaluation of embedded derivatives were not recorded, whereas in three quarters of the previous they totaled PLN 5.0 million. Interest expense on third party financing (utilization of current account overdraft facility and discount of bills of exchange) totaled PLN 2.8 million, i.e. down by PLN 1.5 million, whereas other interest expense totaled PLN 0.2 million, down by PLN 0.5 million. Interest income on idle cash totaled PLN 2.0 million – down by PLN 1.2 million.
Since the end of May 2012 the Company does not have any long-term contracts denominated in foreign currencies with embedded derivatives such as foreign exchange. Consequently the balance of receivables and liabilities under this title is nil. Gross profit before taxation for three quarters 2013 totaled PLN 90.2 million, and was down by 4.7 per cent compared to the same period of the previous year.
The current portion of the income tax totaled PLN 1.1 million, since the Company settled the income tax relief in the amount of PLN 23.8 million, owed to the Company for the execution of investment project in the Euro-Park Mielec Special Economic Zone. The portion of deferred income tax was negative and amounted to PLN 7.1 million and the total income tax was negative and amounted to PLN (6.0) million.
Gross profit before taxation for three quarters 2013 totaled PLN 96.2 million and was up by 27.2 per cent compared to the same period of the previous year. Net profit for Q3 2013 totaled PLN 45.0 million and was up by 16.6 per cent on a year-to-year basis.
Pursuant to the held operational permit No. 134/ARP/2008 of February 27, 2008 for running business activities within the Euro-Park Mielec Special Economic Zone Tire Company Debica S.A. is entitled to enjoy income tax relief up to 42.6 per cent of the discounted amount of capital expenditures spent on investment projects within the Special Economic Zone. The Company met the requirements attached to the operational permit in December 2012 and starting from 2013 onwards is entitled to enjoy income tax relief for legal persons. The operational permit is valid until 2017. As of September 30, 2013 the amount of non-utilized tax relief totaled PLN 89.5 in nominal terms and PLN 71.3 in discounted terms. As of September 30, 2013 the Company utilized the enjoyed tax relief in the amount of PLN 23.8 million in nominal terms.
At the end of September 2013 the tangible fixed assets totaled PLN 823.4 and were up by PLN 67.8 million in 9 months of 2013 in relation to the investment projects underway. The capital expenditures totaled PLN 125 million, whereas the depreciation of existing fixed assets totaled PLN 56.6 million. Due to lease arrangements tangible fixed assets were up by PLN 1.7 million, whereas disposals reduced tangible fixed assets by PLN 2.3 million. The deferred income tax assets amounted to PLN 20.0 million and were up by PLN 10.2 million in relation to the change of taxation of unpaid liabilities with extended maturity date.
The Company’s current assets totaled PLN 733.6 million and were up by PLN 107.3 million.
Short-term receivables totaled PLN 469.7 million and were up within 9 months of 2013 by PLN 146.4 million, of which the amount of PLN 102.5 million was from related entities. Inventory was reduced by PLN 16.2 million to the level of PLN 101.5 million.
Short-term financial assets totaled PLN 160.2 million and were down by PLN 24,6 million for nine months of 2013. Cash and other cash assets were down by PLN 33.6 million, whereas other short-term financial assets (bills of exchange received from the customers) were up by PLN 9.1 million. Short-term prepayments were up by PLN 1.8 million including PLN 0.9 million in relation to social fund. As of September 30, 2013 the Company assets totaled PLN 1 577.2 million and were up by PLN 185.3 million in 9 months of 2013.
At the end of September 2013 short-term receivables totaled PLN 661.4 million and were up within 9 months of 2013 by PLN 135.7 million. The liability provisions were up by PLN 1.6 million. The provisions for employee benefits are down by PLN 1.4 million. The provisions for deferred tax went up by PLN 3.0 million.
The short-term liabilities to related entities were up by PLN 59.3 million including the amount of PLN 35.6 million related to dividend payment. The liabilities vis-a-vis non-related entities went up by PLN 75.4 million. VAT-related liabilities went up by PLN 32.6 million, dividend-related liabilities were up by PLN 11.0 and trade payables were up by PLN 19.7 million. Other liabilities were up by PLN 12.1 million. The social fund was reduced by PLN 0.6 million.
At the end of September 2013 Company equity totaled PLN 915.8 million and was up by PLN 49.6 million during nine months of 2013. The dividend payment for 2012 totals PLN 46.6 million, whereas net profit for 9 months of 2013 was PLN 96.2 million.
For three quarters 2013 the operational activity cash flows were positive and totaled PLN 113.0 million. Net profit and depreciation generated PLN 152.8 million of cash inflows, whereas an increase of working capital generated PLN 29.2 million of negative cash flows. The change in the balance of provisions and accruals generated the negative amount of PLN 10.4 million and in other lines the additional amount of negative cash flows were PLN (0.2) million. The investment activity cash flows were negative and totaled PLN 147.7 million. Financial activities generated negative cash flows that totaled PLN 2.0 million. The interest expense totaled PLN 0.4 million, whereas lease payments totaled PLN 1.6 million. Net cash flows for three quarters of 2013 were negative and totaled (33.5) million. In 9 months of 2013 the cash balance was down by PLN 33.5 million from the level of PLN 184.6 million at the end of 2012, to the level of PLN 151.1 million at the end of September 2013.
Net profit for three quarters 2013 totaled PLN 96.2 million, which was up by 27.2 per cent compared to three quarters of the previous year. Net profit for Q3/2013 totaled PLN 45.0 million and was up by 16.6 per cent on a year-to-year basis.
“Net profit for three quarters 2013 was up by almost 30%. The Company utilized its strong market position to take advantage of the benefits of tire market revival. Close co-operation with our strategic partner Goodyear and also improving economic situation on international arena give hope for good performance in consecutive quarters” – said Jacek Pryczek, CEO and President of Management Board of Tire Company Debica S.A.
Sales to related entities from Goodyear Group for three quarters of 2013 totaled PLN 1 384.1 million, and was up in comparable terms by 3.2 per cent on a year-to-year basis. Sales revenues in Q3 2013 totaled PLN 483.2 million and were up by 1.8 per cent on a year-to-year basis. Sales to non-related entities for three quarters of 2013 totaled PLN 179.9 million i.e. it was down by 8.1 per cent on a year-to-year basis. In Q3 2013 4.0 per cent sales growth was recorded on a year-to-year basis. Sales to related entities for 9 months of 2013 accounted for 88.5 per cent of total sales compared to 88.4 per cent in the same period of the previous year.
Gross profit from sales to related entities totaled PLN 108.7 million, whereas profit margin to revenues was up from 7.8 per cent to 7.9 per cent on a year to year basis. Meanwhile gross profit from sales to non-related entities totaled PLN 40.5 million and profit margin was down from 21.0 per cent to 22.5 per cent on a year-to-year basis.
Gross profit from total sales for 9 months of 2013 totaled PLN 149.2 million and profit margin to revenues was 9.5 per cent compared to 9.3 per cent in the same period of the previous year. An increase of gross profit margin was possible thanks to the reduction of unit production costs by 10.2 per cent and it was achieved thanks to lower material costs.
The costs of sales and general management totaled PLN 61.6 million i.e. down by PLN 1.1 million compared to three quarters of 2012. The share of these costs in total sales was up by 3.9 per cent against 3.7 per cent on a year-to-year basis.
The other operating profit (EBIT) was negative and totaled PLN 1.7 million and is up by PLN 6.0 million compared to three quarters of 2012, mainly due to the absence of costs of non-utilized production capacity, which did not occur in 2013, and their cost in 2012 was PLN 6.4 million. The cost of bad debts is down by PLN 0.4 million. Other operating costs are up PLN 0.8 million.
Operating profit (EBIT) totaled PLN 85.9 million i.e. down by PLN 1.7 million on a year to year basis, but profit margin to revenues was up to 5.5 per cent compared to 5.2 per cent in three quarters of the previous year.
In three quarters of 2013 the financial activity gains were positive and totaled PLN 4.3 million i.e. down by PLN 2.9 million compared to the same period of 2012. Meanwhile the foreign exchange (FX) gains totaled PLN 5.3 million, up by 1.2 per cent compared to the same period in the previous year, whereas gains from the revaluation of embedded derivatives were not recorded, whereas in three quarters of the previous they totaled PLN 5.0 million. Interest expense on third party financing (utilization of current account overdraft facility and discount of bills of exchange) totaled PLN 2.8 million, i.e. down by PLN 1.5 million, whereas other interest expense totaled PLN 0.2 million, down by PLN 0.5 million. Interest income on idle cash totaled PLN 2.0 million – down by PLN 1.2 million.
Since the end of May 2012 the Company does not have any long-term contracts denominated in foreign currencies with embedded derivatives such as foreign exchange. Consequently the balance of receivables and liabilities under this title is nil. Gross profit before taxation for three quarters 2013 totaled PLN 90.2 million, and was down by 4.7 per cent compared to the same period of the previous year.
The current portion of the income tax totaled PLN 1.1 million, since the Company settled the income tax relief in the amount of PLN 23.8 million, owed to the Company for the execution of investment project in the Euro-Park Mielec Special Economic Zone. The portion of deferred income tax was negative and amounted to PLN 7.1 million and the total income tax was negative and amounted to PLN (6.0) million.
Gross profit before taxation for three quarters 2013 totaled PLN 96.2 million and was up by 27.2 per cent compared to the same period of the previous year. Net profit for Q3 2013 totaled PLN 45.0 million and was up by 16.6 per cent on a year-to-year basis.
Pursuant to the held operational permit No. 134/ARP/2008 of February 27, 2008 for running business activities within the Euro-Park Mielec Special Economic Zone Tire Company Debica S.A. is entitled to enjoy income tax relief up to 42.6 per cent of the discounted amount of capital expenditures spent on investment projects within the Special Economic Zone. The Company met the requirements attached to the operational permit in December 2012 and starting from 2013 onwards is entitled to enjoy income tax relief for legal persons. The operational permit is valid until 2017. As of September 30, 2013 the amount of non-utilized tax relief totaled PLN 89.5 in nominal terms and PLN 71.3 in discounted terms. As of September 30, 2013 the Company utilized the enjoyed tax relief in the amount of PLN 23.8 million in nominal terms.
At the end of September 2013 the tangible fixed assets totaled PLN 823.4 and were up by PLN 67.8 million in 9 months of 2013 in relation to the investment projects underway. The capital expenditures totaled PLN 125 million, whereas the depreciation of existing fixed assets totaled PLN 56.6 million. Due to lease arrangements tangible fixed assets were up by PLN 1.7 million, whereas disposals reduced tangible fixed assets by PLN 2.3 million. The deferred income tax assets amounted to PLN 20.0 million and were up by PLN 10.2 million in relation to the change of taxation of unpaid liabilities with extended maturity date.
The Company’s current assets totaled PLN 733.6 million and were up by PLN 107.3 million.
Short-term receivables totaled PLN 469.7 million and were up within 9 months of 2013 by PLN 146.4 million, of which the amount of PLN 102.5 million was from related entities. Inventory was reduced by PLN 16.2 million to the level of PLN 101.5 million.
Short-term financial assets totaled PLN 160.2 million and were down by PLN 24,6 million for nine months of 2013. Cash and other cash assets were down by PLN 33.6 million, whereas other short-term financial assets (bills of exchange received from the customers) were up by PLN 9.1 million. Short-term prepayments were up by PLN 1.8 million including PLN 0.9 million in relation to social fund. As of September 30, 2013 the Company assets totaled PLN 1 577.2 million and were up by PLN 185.3 million in 9 months of 2013.
At the end of September 2013 short-term receivables totaled PLN 661.4 million and were up within 9 months of 2013 by PLN 135.7 million. The liability provisions were up by PLN 1.6 million. The provisions for employee benefits are down by PLN 1.4 million. The provisions for deferred tax went up by PLN 3.0 million.
The short-term liabilities to related entities were up by PLN 59.3 million including the amount of PLN 35.6 million related to dividend payment. The liabilities vis-a-vis non-related entities went up by PLN 75.4 million. VAT-related liabilities went up by PLN 32.6 million, dividend-related liabilities were up by PLN 11.0 and trade payables were up by PLN 19.7 million. Other liabilities were up by PLN 12.1 million. The social fund was reduced by PLN 0.6 million.
At the end of September 2013 Company equity totaled PLN 915.8 million and was up by PLN 49.6 million during nine months of 2013. The dividend payment for 2012 totals PLN 46.6 million, whereas net profit for 9 months of 2013 was PLN 96.2 million.
For three quarters 2013 the operational activity cash flows were positive and totaled PLN 113.0 million. Net profit and depreciation generated PLN 152.8 million of cash inflows, whereas an increase of working capital generated PLN 29.2 million of negative cash flows. The change in the balance of provisions and accruals generated the negative amount of PLN 10.4 million and in other lines the additional amount of negative cash flows were PLN (0.2) million. The investment activity cash flows were negative and totaled PLN 147.7 million. Financial activities generated negative cash flows that totaled PLN 2.0 million. The interest expense totaled PLN 0.4 million, whereas lease payments totaled PLN 1.6 million. Net cash flows for three quarters of 2013 were negative and totaled (33.5) million. In 9 months of 2013 the cash balance was down by PLN 33.5 million from the level of PLN 184.6 million at the end of 2012, to the level of PLN 151.1 million at the end of September 2013.