100,000 tonnes and planned increases of 29% of sales and 39% of EBITDA
Vienna (OTS) –
- Sales of 135 million euros and EBITDA of 10 million euros.
- Improved activities in the final quarter of 2023 resulted in a 52% increase in quarterly EBITDA compared to the same quarter last year.
- The 2024 budget envisages significant increases both through organic growth and following the M&A activities and investments of the last two years.
- The targeted volume increase in 2024 is 33% to 100,000 tonnes, including the contribution of recent purchases.
- The consolidation of recent acquisitions will generate around 15% of the group’s revenue and EBITDA in 2024.
The TeraPlast Group’s financial results in 2023 are characterized by a macroeconomic environment full of challenges. However, the overall development was maintained at a relatively similar level to that in 2022.
At the end of the year, due to specific seasonality, the group’s performance increased compared to the previous year. It can therefore be observed that consolidated EBITDA is 52% higher in the fourth quarter of 2023 compared to the fourth quarter of 2022which is mainly due to the installations segment.
The EBITDA for the full year 2023 was 10.3 million euros, which represents a decrease of 3% compared to 2022. This is mainly due to the decline in the PVC granules market. The EBITDA margin at group level increased slightly to 7.6%. The Installations segment remains the largest and best performing within the group.
At group level The gross margin rose from 32% to 37%, which in absolute terms corresponds to an increase of 10%. However, gross output was affected by rising wages and energy prices. Good cost management will bring significant improvements in this regard.
The group has paid particular attention to efficiency on several levels. At the same time, expansion through investments and M&A transactions will provide a solid foundation for future growth. The economic environment in the coming quarters also presents challenges and influences that are beyond the Group’s control. TeraPlast Group recently acquired the polyethylene system manufacturer Palplast from the Republic of Moldova and signed an SPA regarding the acquisition of the Wolfgang Freiler Group from the Uhl family in Austria.
The Consolidated sales fell by 5% to 135 million euros in the 2023 financial year, which is primarily due to the significant decline in demand in the PVC granulate market. The Exports accounted for 16% of sales and the TeraPlast Group’s products reached 22 European countries. Quantitatively, volumes sold are almost at the same level as in 2022 – 75,346 tonnes in 2023 versus 76,931 tonnes in 2022 – representing a decrease of only 2% year-on-year. The quantitative development in the second half of the year, in particular the 27% increase in volumes in the fourth quarter of 2023 compared to the fourth quarter of 2022, indicates a stronger growth trend than in 2022.
“The results reflect the difficult economic conditions. Demand declined in some of our markets, so we had to focus our efforts on maintaining volumes, market share and margins. “We have had to deal with a different environment than we had forecast at the start of 2023, primarily due to slower progress on water and wastewater infrastructure projects and residential renovations and lower aggregate demand,” said Ioana Birta, CFO of TeraPlast Group.
“2023 was a year full of events, also in terms of expanding activities. We have commissioned a major investment, the Opal stretch film factory, and negotiations for the acquisition of Palplast and the Freiler Group have been completed. We are therefore starting 2024 strengthened by these acquisitions and with good prospects in the Western European markets,” adds Ms. Birta.
Sustainable development, an integral part of TeraPlast Group’s vision
At the European level, the focus on integrating sustainable solutions into the economy is increasing, in particular on increasing the proportion of recycled raw materials and identifying more environmentally friendly alternative raw materials. This is in line with the TeraPlast Group’s vision of sustainable development.
“In the region, we continue to strive to be a promoter of the use of recycled raw materials in our product manufacturing. This commitment is already being implemented in the company: we own a hard PVC recycler that is one of the top 5 in Europe, we have products made from recycled material as well as biodegradable and compostable material in our portfolio and we are expanding the use of renewable energy. This generates sales and enables further measures to increase efficiency. The acquisition of the Wolfgang Freiler Group contributes to this path by providing a strong, competitive player in the Western European markets, a champion with extensive know-how in the integration of recycled materials,” said Mr. Dorel Goia, CEO of TeraPlast Group.
The TeraPlast Group’s initiatives in the area of sustainable development also include reducing electricity consumption from the national energy system. The latest project in this regard is the construction of a new photovoltaic plant near the industrial park in Saratel, a project supported by financing from the PNRR and which will come into operation later this year.
At the same time, the group will intensify its research and development activities to identify expanded applications for the use of recycled and biodegradable materials, as the group’s representatives explain: “We have the Western European example, where governments have great concerns. To identify such solutions that integrate recycled material and alternative materials. The Freiler Group already has experience in developing such solutions, just like us, and this trend will also reach Romania in the near future, so we must be ready to respond to market conditions,” added Mr. Dorel Goia.
At the group level, there were 932 employees at the end of last year, compared to 963 in 2022. The TeraPlast Group team will grow by 169 employees in 2024, due to the integration of Palplast from the Republic of Moldova and expected takeover finalization regarding Wolfgang Freiler- Group.
Budget 2024
The TeraPlast Group is planning a budget for the current year that provides for prudent organic growth. This means that sales at group level are expected to increase by 29% and EBITDA by 39%. For the TeraPlast Group, this means sales of 174 million euros and an EBITDA of 14 million euros in 2024.
The main growth drivers will be the newly acquired companies and the Opal stretch film business. Therefore, it is expected that the ongoing M&A activities of Palplast and the Freiler Group will contribute approximately 15% or approximately 19 million euros to the results of the Installations division. Given the Freiler Group’s solid position in the western markets, the integration will also develop the sales potential for traditional TeraPlast Group products in these markets. The stretch films sold under the Opal brand will contribute around 7 million euros to group sales.
Volumes for the full year 2024 will reach 100,000 tonnes at group level, representing a quantitative increase of 33% compared to 2023.
“The markets in Moldova, Austria and Hungary are important to our group, so the decision to expand geographically through local factories to serve them was natural.” The benefits of this expansion are evident on several levels. First, we optimize the transport costs, i.e. implicitly the product costs. Secondly, synergies at the level of raw materials, product range and production capacities make us more agile in the market, and the savings turn into profits for the company and shareholders. In addition, optimizing transport routes and diversifying the product range also contribute to reducing the carbon footprint. The integration of these acquisitions into the structure of the TeraPlast Group leads to increases in efficiency at all levels and increases the competitiveness of our companies. We also contribute to strengthening European producers who can serve the market even in turbulent and conflict-ridden times with products that are superior in quality to those from outside the EU, also at better prices,” mentioned Mr. Goia.
About the TeraPlast Group
The TeraPlast Group is the largest polymer processor in Southeastern Europe. The group consists of the following companies: TeraPlast, TeraGlass, TeraPlast Recycling, TeraBio Pack, Palplast Moldova and Somplast. Since July 2, 2008, TeraPlast SA has been listed on the Bucharest Stock Exchange under the symbol TRP. The TeraPlast shares are represented in several indices: in the BET (the leading index of the Bucharest Stock Exchange), in the small cap and global all cap indices of FTSE Russell, in the MSCI Frontier IMI (Investable Market Index) and in the ROTX EUR index of the Vienna Stock Exchange .
In the VEKTOR evaluation conducted by ARIR based on 12 criteria for corporate governance and investor communication, TeraPlast achieved the highest score of 10 for the fifth year in a row.
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