Cognor with PLN 30.3 million in net profit after Q1 2017

Cognor Holding reported a substantial improvement in results across the board in the first quarter of 2017. The company’s EBITDA generated in this period, amounting to PLN 41.2 million, is its best result in five years.

In the first quarter, Cognor Holding’s consolidated revenue increased to PLN 429.5 million (+20.8% y/y), EBIT reached PLN 31.6 million, compared to PLN 4.9 million in Q1 2016, while net profit came to PLN 30.3 million, versus a net loss of PLN 6.5 million in the same period last year. “Perspectives for the industry had looked promising but we were pleasantly surprised by the scale of market growth. The improving conditions led to a 7.4% y/y increase in the Company’s overall deliveries of scrap, billets and finished products. At the same time, the prices for this assortment increased by an average of nearly 17%. This is why we increased our revenue by one-fifth year-on-year, whilst nearly doubling gross sales margin to 13.6%,”  explained Krzysztof Zoła, Cognor Holding S.A.’s CFO and management board member.

In effect, Cognor’s EBIT in Q1 2017 went up five-fold year-on-year, while EBITDA reached PLN 41.2 million, the highest level in five years. Consequently, operating cash flows looked very solid in the first three months of 2017 (PLN +31 million), while cash at the balance sheet date amounted to over PLN 25 million. “In terms of net profit, we strongly felt the positive impact of unrealised exchange differences concerning the Group’s debt. Thanks to this, we were able to generate in excess of PLN 18.2 million in finance income, bringing net margin up to 7.1%,” said Krzysztof Zoła.

In the first quarter of 2017, steel prices increased due to higher prices of iron ore, coking coal and scrap – although scrap saw a smaller increase, which proved favourable for Cognor and other companies using arc furnace technologies because this improved their competitive position versus blast furnace steelworks. Anti-dumping duties used by the EU, which eliminated numerous unfair transactions from China, Russia, Belarus and others, were an equally important driver for the company’s results.