Cognor Holding: revenue and profit up in first half-year

Cognor Holding’s consolidated revenue for the first half of 2017 reached PLN 834 million (+15% y/y), with EBITDA of PLN 73.3 million (+55% y/y), operating profit of PLN 53.7 million (+84% y/y) and net profit of PLN 36.8 million.

In the second quarter of 2017 Cognor generated PLN 404 million in revenue (+9% y/y), PLN 22 million in operating profit (+8% y/y) and PLN 6.4 million in net profit, compared to PLN 0.6 million in the previous year. “We have concluded a very successful first half of the year and a good second quarter. The results from April to June were mainly driven by favourable prices of scrap metal (+170 PLN/tonne), billets (+422 PLN/tonne) and final products (+357 PLN/tonne). Given the attractive prices of billets, we increased their production (+53.6%), while reducing lower-margin assortment. The slight declines in EBIT and EBITDA resulted mainly from a negative impact of exchange differences. Net profit was slightly burdened in the second quarter of 2017 by unfavourable currency changes which increased the debt service cost by approx. PLN 0.6 million,” said Krzysztof Zoła, Cognor Holding’s CFO.

For Cognor, the first half of 2017 was also a period of intense activities intended to refinance its debt. In May this year, the company secured bank financing for these purposes amounting to EUR 50 million. Interest on the credit facility is based on WIBOR or EURIBOR plus margin on market terms for this type of transaction. For comparison, current interest on the bonds that are to be repaid with the credit facility and a share issue is 12.5% annualised.

Next, Cognor Holding filed a prospectus with the Polish Financial Supervision Authority in connection with a planned public share offering. The company intends to raise approx. PLN 101 million to re-finance part of its debt. The offering will include between 25.1 million and 67.3 million shares without pre-emptive rights in a public offering.

“Replacing high-yield bonds with credit facilities on market terms and partially with proceeds from the planned equity issue will enable us to realise substantial savings. We estimate that thanks to this new financing structure our finance costs will go down by PLN 25 million per year, starting already in 2018,” said Krzysztof Zoła.

According to the schedule, the company plans to complete the refinancing process at the end of the third and start of the fourth quarter of 2017.