Despite difficult economic environment due to COVID-19, Monbat Group reports only a mild decrease in EBITDA as at 30.06.2020 with overachievement in subsequent periods

Financial
October 01, 2020

As at 30.06.2020 Monbat AD reports consolidated net sales revenues to the amount of BGN 135 090 thousand which represents a decrease by 11.27% compared to the consolidated net sales revenues generated as of 30.06.2019 to the amount of BGN 152 254 thousand.

Despite the drop in revenue attributable to decrease in the demand for batteries due to traffic and certain commercial activity restrictions in March, April and May accepted by a number of European countries following COVID-19 pandemic measures, EBITDA (profit before interest + amortization, decreased with financial incomes and increased with financial expenses) for the period ending Q2 2020 amounted to BGN 17 142 thousand, showing only a modest decrease of BGN 870 thousand or 4.8% if compared to Q2 2019 EBITDA; with an increase of the EBITDA margin from 11.8% to 12.7%.

As at 30.06.2020 EBIT (profit before interest, decreased with financial incomes and increased with financial expenses) of Monbat AD on a consolidated basis is to the amount of BGN 8 180 thousand compared to EBIT on a consolidated basis to the amount of BGN 10 014 thousand as at 30.06.2019. This represents an EBIT decrease by 18.31%. The decrease is due to the mild drop in EBITDA discussed above and the increase in the depreciation expense of Monbat AD on a consolidated basis compared to the previous period with a significant portion of the higher expenses in 2020 being attributable to depreciation deductions related to the adopted accounting policy with respect to the acquired investment property in July 2019.

The consolidated profit before taxes generated by Monbat AD as at 30.06.2020 is to the amount of BGN 5 280 thousand compared to the consolidated profit before taxes as at 30.06.2019 to the amount of BGN 7 642 thousand. This represents a decrease of the profit before taxes by 30.91% which is attributable to the decline in EBIT discussed above, as well as additional financial expenses related to unrealized exchange rate losses stemming from the dollar weakening against the euro with Monbat AD, following the recent expansion of sales in Middle East, having a portion of its clients’ receivables denominated in USD.

As of the date of preparation of the interim consolidated report on the activities of Monbat AD based on the last completed reporting period of August 2020, despite the difficult economic situation caused by the COVID-19 pandemic, which directly affected the sales of batteries in the second half of March, April and May, and the collection of lead-containing materials during the same period, the Group recorded an increase in the realized EBITDA compared to the comparable period ending August 2019. The strong results were driven by the high volumes of batteries sold in June, July and August as well as the high collection of lead-containing materials for the same periods with July being an all-time record high month compared to the historical comparable periods of the Group in terms of sold lead-acid batteries. In addition to the growth in the realized volumes in June, July and August 2020 compared to the comparable period for 2019, some key managerial decisions such as focus on sales in product segments - e.g. stationary batteries for telecom operators and data centres which experienced increase demand due to COVID-19 pandemic and non-indexation of sales prices in these product segments, had a positive effect on sales margins, thereby mitigating the effect of the intermediate decline of the lead metal exchange index.

The positive trends in the sales of finished products and collection of lead-containing materials continue in September and the expectation of the management is that year end EBITDA for 2019 will be overachieved in 2020.