Teraplast (TRP) Q2 2024 earnings summary

Executive summary

• Turnover rose 34% year-over-year to RON 428 million in H1 2024, with volumes up 57% to 54,009 tons, driven by organic expansion, M&A, and strong infrastructure demand.

• EBITDA increased 15% to RON 26.9 million, but margin declined to 6.3% due to aggressive pricing, integration costs, and market share expansion.

• Net result was a loss of RON 6.6 million, impacted by non-recurring M&A, ramp-up costs, higher depreciation, and minimum turnover tax.

• Sales outside Romania doubled to RON 100 million, now representing 23-24% of turnover, enhancing business resilience.

• Acquisitions of Wolfgang Freiler Group and Palplast Moldova contributed significantly to growth but faced margin pressures in Western Europe.

Financial highlights

• Turnover reached almost RON 430 million, up 34% year-over-year and 13% above budget.

• Gross margin decreased to 35% from 37% year-over-year, as part of market share expansion strategy.

• Operating costs rose 35% due to higher raw material, salary, and utility expenses, partly from M&A.

• Net working capital increased to RON 236.7 million, 30% of sales, due to consolidation of Freiler Group.

• Net debt rose to RON 343.9 million, with net debt/EBITDA at 6.3x, expected to fall below 5x by year-end.

Outlook and guidance

• Conservative budget maintained for H2 2024 amid macroeconomic uncertainties, but positive trends expected to continue.

• Net result expected to return to positive in Q3 2024, per budgeted targets.

• Debt ratio projected to fall below 5 by year-end, supported by capital increase and subsidy inflows.

• Ongoing integration of acquisitions and product portfolio expansion to support future growth.