The Teraplast Group reported a net profit for the first nine months of 2018 at RON 22.3 million, up 40 percent the same period of the previous year. During January – September 2018, the company’s business volume increased by approximately 100 percent at RON 590.4 million, as shown by Tradeville analysis. But on the Bucharest Stock Exchange (BVB) Teraplast (TRP) shares recorded a decrease by 12.5 percent ytd signaling a possible undervaluation.
The positive evolution of the company’s sales was mainly driven by the accelerated growth of over 208 percent of sales of the Steel Division compared to the same period of the previous year to RON 350.7 million, a division whose share in total revenues is of 59 percent. Also, the company’s plastic division registered an increase of over 33 percent to RON 240.7 million.
The company’s operating expenses increased by 102 percent to RON 559 million, due to the rise in activity operational and expansion process of Teraplast both through the opening of new workplaces and subsidiaries, as well as through taking over players on the building materials market. Of the operational expenses, we note the doubling expenses on raw materials and commodities compared to the first nine months of 2017, up to RON 448.45 million, but also the increase personnel expenses by 74.7 percent to RON 48.9 million, due to the legislative changes introduced the wage law and the increase of the team with 66 new employees to support the development phase of the company. Also, at “Other Expenses”, the company recorded a 73.57 percent increase to 52.6 mi. RON, due to the increase in transport expenses by 68.3 percent to ROL 20.7 million due to the rise in fuel prices and the development of transport activity of building materials.
Although operating expenses showed a significant increase, the operating result increased by about 70 percent at RON 32.5 million.
The company’s investment strategy led to EBITDA growth of 60.33 percent to RON 52.7 million, but the EBITDA margin was decreased by 20 percent compared to the same period of the previous year to 8.94 percent.
The acquisition of Serbia ‘s sandwich panels takeover of Depaco’s control led to accelerated sales growth in the Steel Division. Just 1 year since opening, TeraSteel Serbia has registered a sales volume over 1 million square meters thermal insulating panels and over 100,000 linear meters knotted sheet, worth about EUR 13 million. At the level of the Steel Division, TRP showed an EBITDA increase of 120 percent to RON 31.7 million.
From the point of view of the company’s presence on the market internationally, at the level of Central and Eastern Europe the company owns a market share of the sandwich thermal insulation panels of 17.4 percent, while on the board segment holds 70 percent of the production local.
Income on the Plastics Division (which includes PVC, polyethylene, insulating and insulating joinery PVC granules) increased in turn by 33 percent to 240 million RON. The Plastics Table Division recorded a EBITDA growth of 13.58 percent to RON 21 million.
In addition to companies trhat aim to emphasize the importance of using quality pipes, TRP is one of the main suppliers of the the infrastructure funded by the NRDP and the European Fund Agriculture Rural Development and Budgetary Funds, which has led to sales growth in the segment installations and fittings by 43 percent to 127.9 million RON. After ran investment of EUR 3.8 million, the company created a section recycling for rigid PVC that has the potential of streamlining spending on raw materials. Into the TRP is currently posing in the top 10 PVC recyclers at European level and 1st at the national level.
In addition to the company’s investment and development strategy that has proved to be profitable so far, the company has benefited an increase in the demand for building materials, especially from the residential buildings sector. Generally, in the last two years, the number of construction permits followed a positive trend, between January and September 2018 registering a number of over 33 thousand issued permits, up 4 percent over the same period of the previous year.
The positive trend was supported by the increase of the population’s incomes, the spreading of the programs for stimulating the mortgage loans, but also by an expansive monetary policy, both nationally and globally.
The company aims to continue the investment campaign in September 2018 by submitting three projects through the “state aid to stimulate investments with a major impact on the economy” amounting to EUR 15 million. Projects target the acquisition of machinery and equipment for increasing production capacities, portfolio diversification and the establishment of new production units.