Sniezka paint sees maintaining y/y sales volume in 2024 as challenge

"Maintaining the volumes of 2023, both in terms of volume and revenue, throughout 2024 will be a challenge," the management replied when asked about the possibility of a volume rebound in the decorative paints market in the second half of the year.

Decorative products account for around 83 percent of the group's sales revenue in the first half of 2024.

"It is still a question of demand development," Sniezka's deputy CEO Joanna Wrobel-Lipa added.

The deputy CEO pointed out that the current market conditions are shaped to a large extent by purchasing power and consumer sentiment, which are influencing limited demand in the industry. These factors are influenced by the geopolitical situation, real wage growth and the demand structure currently observed, where customers are more likely to choose services at the expense of durable goods.

The Sniezka Group generated PLN 402.6 million (EUR 94.3 mln) in sales revenue in the entire H1 2024, a year-on-year decrease of 7.3 percent. In the analysed period, EBITDA was PLN 67.4 million (EUR 15.8 mln) and net profit amounted to PLN 31.7 million (EUR 7.4 mln), down 15.9 percent and 23.2 percent, respectively, compared to the same period last year.

"The double-digit year-on-year declines at the end of June are the result of a high base of record 2023 results," Wrobel-Lipa explained.

The group's net debt/EBITDA ratio fell to 2.08 at the end of June from 2.35 in the prior year period, with CAPEX spending delivered as planned.

"After a major investment cycle, at the moment the main focus of capex spending is on maintaining the production potential, the logistics of our infrastructure, but also the digitalisation of processes," Wrobel-Lipa pointed out.

She added that at some point the market will rebound, growth will start, and the group wants to be ready for this.

"In terms of gross profitability on sales, we have reached 48.4 percent, a record result in the history of the group. Definitely difficult to maintain in the long term. Here, currencies were primarily at work," the deputy CEO stressed.

It was reported that the strong position of the zloty against the euro, the currency in which the group mostly buys raw materials, allows it to better control production costs.

On the other hand, the strengthening of the zloty against the hryvnia and forint has an adverse effect, reducing revenues.

The group's key markets are Poland (with 71 percent share in the revenue structure in the first half of the year), Hungary (13.2 percent share) and Ukraine (10.7 percent share).

The management reported that, despite the difficult external conditions, sales in Poland increased by 4.1 percent to PLN 161.5 million (EUR 37.8 mln) in the second quarter.

"In these difficult macroeconomic conditions, we were able to maintain market share in the dominant Polish market," Joanna Wrobel-Lipa said.

The group paid out nearly PLN 40 million (EUR 9.4 mln) of dividends in May, which amounted to PLN 3.17 (EUR 0.74) per share.

gaw/ nl/ ao/