Rba Jrmipari : Report of RBA Plc. for H1 of 2022







Report of Rába Plc. for H1 of 2022

Unaudited, consolidated half-year report

according to the International Financial Reporting Standards (IFRS)

Company:

RÁBA Automotive Holding Plc.

Company address:

H-9027 Győr. Martin u. 1.

Sector:

Machine industry

Period:

H1 of 2022

E-mail:

ir@raba.hu

Investors relations:

Éva Lang-Péli

EXECUTIVE SUMMARY

KEY ACHIEVEMENTS OF THE BUSINESS

  • Supply chain disruptions because of the COVID-19 pandemic, together with the crisis on the energy market felt in Q4 of 2021 were compounded by yet another substantial risk factor trig- gered by the Russian-Ukrainian military conflict. By Q2 of 2022, economic actors realised that the severe economic difficulties will not be resolved in the short-term. Earlier supply problems became more severe in the wake of the drastic decline in East-West supplies. The uncertainties caused by the war and the policy of sanctions raised inflationary pressures to unprecedented levels. In Q2 of 2022 all relevant cost elements exerted record pressure on the efficiency of the operating activity and as regards long-term outlooks, extended uncertainty and at the same time continued drastically high purchase prices can be expected.
  • In H1 of 2022, there was still substantial activity on Rába’s principal markets, on the European truck and global agricultural vehicle markets customer demands exceeded those of the base period, the passenger vehicle segment, however, was characterised by a substantial decline due to increasing disturbances in supply. Leveraging market demand and responding to eco- nomic challenges in a flexible manner, the Rába Gro up achieved the highest sales revenue of the last decade both at half yearly and quarterly level. In Q2 all business units engaged in pro- duction activities achieved a sales increase in excess of 30 per cent, as a result of which the quarterly sales revenue at group-level amounted to HUF 16.7 billion, with a 35.8 per cent in- crease. Owing to the outstanding revenue increase in Q2, in H1 of 2022, group-level sales amounted to HUF 30.0 billion, which is 26.6 per cent higher than the level of the base period a year earlier. In terms of the exchange rate environment, in the exchange rate of the USD repre- senting a lesser portion in the company’s foreign exchange turnover, there was a considerable increase by 21.0 per cent, and in the EUR, representing a more substantial portion of FX sales, there was a moderate increase by 4.8 per cent compared to the levels of the previous year.
  • In Q2 of 2022, steel purchase prices increased further reaching record levels. There was no significant decline in energy prices and average wages exceeded the base period substantially, upon accelerating increase. Inflation has become a general feature putting drastic pressure on the operating activity and profitability.
    The Rába Group passes on the above increased costs to its customers in accordance with the provisions of the contracts concluded and in line with individual agreements, mostly with a quar- terly delay and in the case of complete products, with more long-term, fixed orders, with a longer time delay. The considerably and continuously increasing purchase prices and the delay in pass- ing on such costs, have led to the fact that the inflationary pressure has had a considerable negative impact on the group’s profitability and margins in H1 of 2022.
    It is the Rába Group’s firm objective to neutralise these negative impacts as soon as possible, through the enforcement in sales prices of the increase in purchase costs.
  • In H1 of 2022, gross margins at group level amounted to HUF 5,313 million, an increase by 10.6 per cent, as a result of the outstanding sales figures, the flexible adjustment in production and due to the drastic increase in production costs. In Q2, the group of companies achieved a con- siderable increase in margin: gross margin during the reporting period exceeded the level of the

RÁBA Plc’s consolidated report for H1 of 2022 in accord ance with the IFRS

previous period by 32.9 per cent, i.e. HUF 840 million and amounted to HUF 3,395 million.

  • The balance of other revenues and expenditures amounted to HUF 287 million in profit during the review period, against the profit of HUF 888 million during the same period of the previous year. The revenue of other activities during the base period included a substantial real estate transaction, with an impact of HUF 815 million on the profit.
  • In Q2 of 2022 the group of companies achieved significant operating profits. The revenue from operations reached HUF 1,234 million, with a 7.4 per cent efficiency. All subsidiaries contributed to the operating revenues during Q2 with a profit exceeding that of the base period: the Axle Business Unit generated HUF 692 million, with an increase by 53.8 per cent, the Components Business Unit generated HUF 357 million with an increase by 17.8 per cent and the Vehicle Business Unit generated HUF 85 million in operating profits upon an increase by 26.9 per cent. Following the loss-making Q1 burdened by considerable excess communal energy costs, the confident performance in Q2 has ensured the profit at operating level in H1 of 2022: the revenue from operations at group-level amounted to HUF 750 million.
  • All organizational units of the Rába Group make su bstantial efforts to regain cash generating capabilities compromised by the disturbances in the supply chain and the drastic inflationary pressures. Key measures, in addition to passing on to customers of the increased production costs include further increase of production flexibility, renewal of production technology and the consistent improvement of efficiency in addition to stringent cost control. The EBITDA-level profit of the Rába Group during Q2 of 2022 amounted to HUF 1,854 million, upon an efficiency of 11.1 per cent. All business units with production activities contributed EBITDA-level results exceeding the base period to the group-level result. The contribution of the Axle Business Unit was HUF 1,121 million, of the Components Business Unit was HUF 478 million, whereas of the Vehicle Business Unit was HUF 87 million at EBITDA level in Q2. Through such improving cash gener- ating capabilities the group-level EBITDA for H1 of 2022 amounted to HUF 1,991 million.
  • The financial result in H1 of 2022 amounted to HUF 906 million in losses, compared to the HUF 260 million in profits generated during the same period of the previous year. The financial per- formance was influenced by the realised exchange rate loss by HUF 855 million and the net interest burden of HUF 47 million.
  • The total aggregate income and profit for H1 of 2022 amounted to a loss of HUF 252 million.
  • The financial situation of the Rába group was char acterised by a stable liquidity position in spite of the challenges of the COVID-19 pandemic period and the uncertainties caused by the Rus- sian-Ukrainian military conflict. The net borrowings amounted to HUF 13.2 billion at the end of the review period, an increase by HUF 5.7 billion compared to the base period. Of the factors influencing the level of net borrowings, the operating profit since the base period, and the in- crease in working capital (increased stock level) because of increasing production volumes and the safety of supply, and capital expenditures are noteworthy. The revaluation, due to exchange rate fluctuation, of loans, worth HUF 1,319 million, not involving cash movements, also contrib- uted to the increase in net borrowings.
  • The shareholder’s equity declined by 3.7 per cent compared to the same period of the previous year. The shareholder’s equity per share reached HUF 1,553/share.

Thousand HUF

H1 2021

H1 2022

Change

Q2 2021

Q2 2022

Change

Sales revenue

23 707 014

30 007 278

26.6%

12 330 278

16 742 125

35.8%

Gross profit

4 805 675

5 312 939

10.6%

2 555 365

3 394 998

32.9%

Gross margin

20.3%

17.7%

-2.6%p

20.7%

20.3%

-0.4%p

EBITDA

3 008 529

1 991 138

-33.8%

1 995 459

1 853 659

-7.1%

EBITDA level

12.7%

6.6%

-6.1%p

16.2%

11.1%

-5.1%p

Operating profit

1 804 113

749 758

-58.4%

1 405 536

1 233 912

-12.2%

Net financial profit/loss

260 119

-906 194

-448.4%

193 934

-841 724

-534.0%

Profit after tax for the cur-

1 826 064

-252 028

-113.8%

1 462 357

317 627

-78.3%

rent year

Total aggregate income

1 826 064

-252 028

-113.8%

1 462 357

317 627

-78.3%

2

RÁBA Plc’s consolidated report for H1 of 2022 in accord ance with the IFRS

GOAL AND STRAGY OF THE BUSINESS

“The accumulating challenges of the most recent period result in increasingly tense situations for economic actors. It has become clear to everyone that we have to come to terms with and adjust in the longer term to difficulties such as the European energy price crisis, supply disturbances or a prolonged war. In this extraordinarily uncertain situation we have been making considerable efforts to adapt to the challenges in a flexible manner. We continue to stand by our main target set at the beginning of the year, to maintain Rába’s operating stability. We continue to exercise stringent cost control and focus consistently on the renewal of our production activities and invest heavily in passing on the additional burdens resulting from the energy costs, which increase further in the third quarter”, said Bála Hetzmann, Chairman-Chief Execut ive Officer of Rába Automotive Holding Plc.

BUSINESS ENVIRONMENT OF THE ENTERPRISE

  • The disrupted supply chains in the wake of the COVID-19 pandemic, together with the explosion in energy prices experienced in Q4 of 2021, were coupled by the Russian-Ukrainian military conflict in H1 of 2022, presenting yet another significant risk factor. Earlier supply problems were exacerbated as a result of the drastic decline in East-West supplies, and the uncertainties of the war and the sanctions have raised inflationary pressures to unprecedented levels. By Q2 of 2022, economic actors realised that the severe economic difficulties will not be resolved in the short- term, and that adjustment to external circumstances and flexible adaptation should become an increasingly important aspect of their daily operation. The military conflict was felt in the Euro- pean passenger car industry and the Russian commercial vehicle sector in the first place. The decline in demand has not yet been felt by H1 of 2022 in the European commercial vehicle mar- ket and the global agricultural segments.
  • The economy of Western Europe was still characterised by substantial demand in H1 of 2022, resulting in substantial demand for shipping and considerably increased shipping costs, due to the supply disruptions. All this laid the foundation for the expansion and renewal of commercial vehicle fleets. Consequently, in H1 of 2022, demand activity exceeded that of the previous year on all major commercial vehicle markets of Rába.
  • In H1 of 2022, the demand of the European commercial vehicle market marginally exceeded the level of the base period a year earlier, the registration of heavy vehicles in Europe increased by 0.4 per cent. Market outlooks for the remainder of the year remain positive, forecasts however, have become much more uncertain due to the substantial economic and political risks. The North American commercial vehicle market showed a decline of 1 per cent compared to the base period in 2021. The demand for Rába’s agricultural product s increased considerably compared to the base period of 2021: the volume has increased by some 48 per cent since the base period. In Q2 of 2022, the Russian truck market was already heavily impacted by the Russian-Ukrainian military conflict: most of the foreign manufacturers suspended their production activity in Russia and domestic producers cut back on production volumes considerably. Similar reactions have so far not been experienced on the Russian bus market. In compliance with the sanctions in force against Russia, Rába had no commercial activities w ith its Russian partners in Q2 of 2022. The supply chain of the European passenger vehicle market has substantial East-European expo- sure, so it is no surprise that there was a strong decline in volumes in reaction to the Russian- Ukrainian military conflict. In H1 of 2022, the number of new car registrations declined by 14 per cent
  • In light of the negative external economic factors, including the extended Russian-Ukrainian mil- itary conflict, safety of supply has become even more important, at the expense of the importance of purchase prices. As a result, steel raw material purchase prices have gone up to an unprece- dented extent. In Q4 of 2021 steel purchase prices were the highest of the past decade impacting productions and rose even further in H1 of 2022 by a considerable 35 per cent. Thus purchase prices over the review period on a year/year basis increased drastically, by 53.3 per cent.
  • The substantial shortage of labour force characteristic for the labour market across the board, together with the generalised inflationary pressure, have raised the risk of labour fluctuation con- siderably, suggesting a substantial increase in wages. National average wage increases in an accelerated fashion reaching 13.9 per cent in Jan-May, 2022. Finding and implementing into the

3

RÁBA Plc’s consolidated report for H1 of 2022 in accord ance with the IFRS

production technology the improvement in operating efficiency to cover the prolonged increase of wage costs remains a major challenge for the Company.

  • The energy crisis on the European market taking shape in H2 of 2021 was aggravated by the Russian-Ukrainian military conflict to unprecedented levels. Market players have had to learn that the explosion of energy prices is not a transitory phenomenon. The increasingly severe crisis on the energy market resulted in energy prices soaring to unprecedented levels, which prevailed during Q2 as well, upon modest consolidation. Thus, in H1 of 2022, energy prices were 247.3 per cent higher than during the base period, exerting pressure on operating activities and profit- ability. In terms of future outlooks of the energy market, long-term uncertainty and at the same time drastically increasing purchase prices are to be expected. The contracting terms of the Rába Group made it difficult to fix energy purchase prices so the Company manages the effects of the crisis primarily by increasing integrity and making sales prices more flexible.
  • With regard to the exchange rate environment, a substantial increase by 21.0 per cent occurred in the case of the USD, representing a lesser proportion in the FX turnover of the company, whereas for the EUR, representing more substantial weight in the FX turnover, a more moderate increase by 4.8 per cent was seen compared to the levels of the previous year.1

H1 2021

H1 2022

Change

Q2 2021

Q2 2022

Change

EURHUF – average

357.9

375.1

4.8%

354.8

385.9

8.8%

EURHUF – end of period

351.9

396.8

12.7%

351.9

396.8

12.7%

USDHUF – average

297.0

359.3

21.0%

294.3

362.5

23.2%

USDHUF – end of period

296.0

380.0

28.4%

296.0

380.0

28.4%

Changes in raw material prices*

130%

199%

53.3%

136%

213%

56.3%

Wage level**

440.8

502.2

13.9%

450.7

515.1

14.3%

Changes in energy prices***

217%

755%

247.3%

225%

717%

219.2%

*Rába indices – own calculation – base: 2007. H1; a verage values for the period

**KSH (Central Statistical Office) national gross average wage (thousand HUF/month) -based on 01-05. 2022 data

***Rába indices – own calculation – base: Dec. 2004 .; average values for the period

1 The average exchange rates were calculated based on the official FX exchange rates of the MNB. Source: http://www.mnb.hu/arfolyam-lekerdezes

4

RÁBA Plc’s consolidated report for H1 of 2022 in accord ance with the IFRS

SUMMARY OF RESULTS ACHIEVED DURING THE REVIEW PERIOD

Rába Axle Ltd.

The sales revenue of Rába Axle Ltd. in H1 of 2022 a mounted to HUF 20.0 billion compared to HUF

15.3 billion achieved during the base period of 2021. This corresponds to an increase of 31.1 per

cent.

On the American market the sales revenue in the reporting period was USD 5.6 million, compared to the USD 3.0 million in H1 of 2021. This corresponds to an increase by 86.7 per cent.

On the EU market Rába Axle Ltd.’s sales figures in HUF terms increas ed by 39.7 per cent, amounting to HUF 16.9 billion, compared to HUF 12.1 billion during the base period.

European exports in H1 of 2022 exceeded the level of the base period by 33.7 per cent, amounting to EUR 35.7 million, against EUR 26.7 million in H1 of 2021.

Domestic sales before consolidation amounted to HUF 3,508 million, which represents an increase by 39.7 per cent compared to the HUF 2,511 million of the base period.

On the CIS and East-European markets the export sales revenues achieved by Rába Axle Ltd. in H1 of 2022 were 75.0 per cent lower than the base period in 2021, decreasing from EUR 0.8 million in the base period to EUR 0.2 million.

In the other markets the sales revenue during the reporting period amounted to EUR 2.8 million, which was 50.0 per cent lower than the EUR 5.6 million turnover of the 2021 base period.

The operating result of the Company in H1 of 2022 was a loss of HUF 79 million, compared to HUF 645 million profit during the same period of the previous year.

At EBITDA level, the operating profit of the Axle business was HUF 780 million compared to profits of HUF 1,468 million registered a year earlier.

H1 2021

H1 2022

Change

Q2 2021

Q2 2022

Change

America

896

1 997

122.9%

591

1 131

91.4%

EU – export

9 545

13 381

40.2%

5 014

7 578

51.1%

EU – domestic

2 511

3 508

39.7%

1 274

1 858

45.8%

CIS

302

65

-78.5%

156

-3

-101.9%

Other

2 001

1 057

-47.2%

1 043

606

-41.9%

Total sales revenue

15 256

20 007

31.1%

8 079

11 170

38.3%

EBITDA

1 468

780

-46.9%

853

1 121

31.4%

Operating profit

645

-79

-112.2%

450

692

53.8%

Rába Automotive Components Ltd.

The sales revenue of Rába Automotive Components Ltd . amounted to HUF 9.7 billion in H1 of 2022, which is a 21.1 per cent increase compared to the base period.

Rába Automotive Components Ltd. generates a conside rable portion of its sales on the European market.

European exports during H1 of 2022 amounted to EUR 13.5 million, which represents an increase of 28.6 per cent compared to the EUR 10.5 million of the base period of 2021.

Domestic sales before consolidation amounted to HUF 4,639 million during the reporting period, which corresponds to an increase by 9.1 per cent compared to the sales revenue of HUF 4,252 million during H1 of 2021.

The Company generated a profit of HUF 376 million at operating level during the reporting period compared to the profit of HUF 532 million in H1 of 2021.

On the level of EBITDA, the profit of the Components business unit was HUF 619 million during the period, compared to the profit of HUF 749 million of the previous year.

5

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RÁBA Jarmuipari Holding Nyrt. published this content on 24 August 2022 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 24 August 2022 15:57:04 UTC.

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All news about RBA JRMIPARI HOLDING NYRT.

Sales 2020 38 754 M

Net income 2020 -1 030 M

Net Debt 2020 6 663 M

P/E ratio 2020 -19,4x
Yield 2020
Capitalization 15 356 M
37,2 M
EV / Sales 2019 0,47x
EV / Sales 2020 0,69x
Nbr of Employees 1 231
Free-Float 24,8%

Chart RBA JRMIPARI HOLDING NYRT.



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