MASTERPLAST PLC.
INTERIM MANAGEMENT REPORT
31 October 2024
THE MASTERPLAST PLC.
Interim Management Report
3rd Quarter 2024
Consolidated, non-audited
According to International Financial and Reporting Standards (IFRS)
31 October 2024
MASTERPLAST PUBLIC LIMITED COMPANY
CONTENTS
Profit and loss account | 12 |
Other comprehensive income | 14 |
Balance sheet presentation and analysis | 15 |
Cash flow, bank information | 17 |
Investigations against Masterplast | 18 |
Change in equity | 19 |
Contingent liabilities | 19 |
Changes of the full-time employees (headcount) | 20 |
Significant events between the quarter-end and the publication of this report | 20 |
Balance sheet compared with 31 December 2023 status | 21 |
Consolidated companies | 22 |
Executives and (strategic) employees influencing the operation of the Issuer | 23 |
Shareholders of the Company with a holding above 5% | 23 |
Presentation of the amount of own shares (pcs) | 24 |
Publications issued by Masterplast PLC. in the reference period | 25 |
DECLARATION | 27 |
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MASTERPLAST PUBLIC LIMITED COMPANY
MASTERPLAST
Founded in 1997, Masterplast Group is the largest Hungarian-owned building materials manufacturing company in the Central European region. It has a direct market presence in 10 European countries through its subsidiaries and is present in most European countries through its export partners. It has a strong position in the market for façade insulation, high roof insulation and dry construction systems.
It ensures its product background mainly through manufacturing at its ISO and TÜV certified production sites in Hungary, Serbia and Germany and through strategic manufacturing partnerships. In 2020, the company entered the healthcare segment, and its strategic goal is to make the modular business division
a success as soon as possible. Due to the growing demand for fibre insulation materials, the company's focus in 2023 was on the establishment of rock wool and glass wool insulation material plants to meet the needs of the Hungarian and Central and Eastern European markets. Its production development plans are now in the implementation phase in both targeted product segments.
Masterplast provides competitive business services to its partners through a well-established customer- oriented sales system, continuous quality control of manufactured and distributed products, a stable product supply background and flexible logistics solutions.
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MASTERPLAST PUBLIC LIMITED COMPANY
SUMMARY
In the third quarter a weak construction industry economy was typical throughout Europe, and the expected stimulating effect of the new emerging programs is also delayed in the Hungarian market. Nevertheless, the gradually improving trend continued at Masterplast: the sales revenue increased slightly compared to the previous quarter, and the EBIDTA was also higher, reaching EUR 1,5 million. Despite the 10% lower Sales level, as a result of the more efficient operation, the Company's cumulative EBITDA profit of EUR 3,5 million was EUR 6,4 million higher than the year before. The quarterly profit after tax was lower than last year due to the better financial result of the base period (more favorable exchange rate movement), but at the same time, the profit after tax improved by almost EUR 7 million cumulatively compared to the year 2023 in a similar market situation.
Data in 1000 EUR | Q3 2024 | Q3 2023 | Change | 2024 YTD | 2023 YTD | Change |
Sales revenues | 35 721 | 38 301 | -2 580 | 102 901 | 113 715 | -10 814 |
EBITDA | 1 500 | -439 | 1 939 | 3 511 | -2 932 | 6 443 |
EBITDA ratio | 4,2% | -1,1% | 3,4% | -2,6% | ||
Profit/loss after taxation | -1 291 | -598 | -693 | -2 984 | -9 908 | 6 924 |
Net income ratio | -3,6% | -1,6% | -2,9% | -8,7% |
Source: the Group's IFRS consolidated non-audited accounts as at 30 September 2024 and non-audited accounts as at 30 September 2023, and non- audited data from the Group's management information system
The third quarter also fit into this year's trend in terms of economy and industry. As a result of the high interest rate and the EU directive-based renovation programs that are still in outline, the construction industry continued to be weak in Europe, both in the new buildings and in the renovation segment. Although the home renovation program started in the Hungarian market, its stimulating effect still did not appear in the current quarter. At the same time, at the end of the quarter, the resale of Certified Energy
Savings (HEMs) - that are generated for energy renovations with the contribution of Masterplast - began, and minimally improved the performance.
Masterplast's quarterly sales revenue reached this year's highest level in the third quarter and was only 7% behind a year earlier. In terms of product groups, the turnover of the recently introduced heat, sound and waterproofing materials containing the own produced XPS increased, and thanks to the HEM sales, the sales revenue of the industrial applications
8 | |||||||||||
10,2% | EBITDA (m EUR) | ||||||||||
5 235 | 5 729 | ||||||||||
2,1% | 2,6% | 3,3% | |||||||||
1 230 | - | 1 153 | 1 500 | ||||||||
856 | |||||||||||
676 | |||||||||||
-5,4% | |||||||||||
-463 | - 439 | -10,1% | |||||||||
-2 032 | |||||||||||
-3 194 | |||||||||||
2022 I. | 2022. II. | 2022. III. | 2022. IV. | 2023 I. | 2023. II. | 2023. III. | 2023. IV. | 2023. IV.* | 2024 I. | 2024 II. | 2024 III. |
*Q4 EBITDA cleraed from year-endone-off items
Source: the Group's IFRS consolidated non-auditedaccounts for 2023 and 2024 and non-audited data from the Group's management information system
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product group also increased. Examining the markets, most of them decreased in turnover compared to the base except for the Polish, Serbian and German areas, where the Company achieved growth.
In the organization adapted to demand conditions, the own production capacities operate more cost- effectively. The profitability of the Serbian fiberglass factory has improved significantly compared to a year ago, turning last year's loss-making operation back into profit. The EPS factories operated at a lower capacity utilization, while the non-woven textile plants operated at a higher capacity utilization in the quarter
The cost of materials and services decreased in the third quarter too compared to the base. The personnel costs increased by 23% compared to last year's base, the closing headcount (1 281) was 111 more than a year earlier. In terms of other expenses, the result was more favorable in the current quarter as a result of the inventory provision value that occurred last year.
The Group EBITDA reached a profit of EUR 1 500 thousand in the third quarter (4,2% EBITDA share), compared to a loss of EUR 439 thousand (-1,1% EBITDA share) in the base period, while the cumulative EBITDA closed at EUR 3 511 thousand, compared to last year's EUR 2 932 thousand loss.
The depreciation increased mostly as a result of the recently launched XPS production unit. Taking depreciation into account, the company's EBIT result for 2024 was a loss of EUR 2 048 thousand which was EUR 5 548 thousand improvement than the year before.
1 (REPowerEU Plan; "Fit for 55%" package of measures; Renewal Wave Strategy; Energy Performance of Buildings Directive - EPBD)
MASTERPLAST PUBLIC LIMITED COMPANY
The financial result for the current quarter was determined by the interest result. Exchange rate movements had a neutral effect on the result, in contrast to the base period, where they significantly improved it.
The Company's profit after tax was a loss of EUR 1 291 thousand in the third quarter compared to a loss of EUR 598 thousand a year earlier. The profit after tax closed at EUR 2 984 thousand in the first nine months which represents a significant improvement compared to the loss of EUR 9 908 thousand a year earlier.
The Company also plans to launch additional HEM based programs in the future. Significant business potential for Masterplast is the new home renovation program that can already be used on the Hungarian market. Until now has not been attractive enough for consumers due to its complicated administrative burdens, but the program is being simplified. All of these, and the additional support programs with a focus on building energy, due to be launched across Europe in the foreseeable future, will probably increase the Company's sales revenue and profit- generating capacity at a faster pace in 2025.
With the packages of measures introduced to meet EU energy policy objectives1 , the medium-term business outlook for the Company in the insulation market remains positive. Relying on these factors, the Company strives to maintain its current production capacities and continues to work on the implementation of stone and glass wool production investments.
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BUSINESS PROSPECTS
The main objective of the European Union's Energy Performance of Buildings Directive (EPBD) is to significantly reduce the energy consumption of buildings through energy efficiency measures and to achieve the EU's climate neutrality target for 2050. It requires Member States to draw up national plans to gradually improve the energy efficiency of the building stock, including increasing the renovation rate and developing long-term strategies.
This involves regulatory changes in member countries and the launch of renovation programs, which is expected to lead to significant growth in demand for insulation materials in the medium and long term. In Hungary - the company's largest market - the new home renovation program has been available since July 2024, offering favorable conditions for energy- efficient upgrades of family houses built before 1990. Due to its complicated administrative burdens, it has not been attractive enough for consumers so far, but the scheme is being revised to simplify it, so its impact will probably be felt on the market from the beginning of 2025. Also significantly improves the prospects for the construction sector in Hungary that 10 of the 21 points from the New Economic Policy Action Plan support the construction industry and the housing market. The measures of the Action Plan will enter into force in the beginning of 2025.
Entering the market for Certified Energy Savings (HEMs) presents business potential for the Company. HEMs are assets with limited marketability, generated through various energy efficiency measures by accredited organizations. These HEMs can be resold to organizations obligated to save energy within the framework of the so-called Energy Efficiency Obligation System (EKR). Masterplast launched its Hungarocell Renovation Program in September 2024, the first promotion in Hungary that generates HEMs related to the thermal insulation of family homes. In addition, through its partners, the Company has also joined attic insulation programs, operating on a similar principle. Turnover from HEM transactions is expected to increase in the last quarter as well. The Company plans to launch further EKR-HEM based programs in the future.
MASTERPLAST PUBLIC LIMITED COMPANY
The European Central Bank has already begun its action to cut interest rates, which is expected to continue in order to improve the weak economic performance. This should lead to a reduction in mortgage rates in the euro zone, which should provide further potential for the Company by reviving the investment (new buildings) market segment.
Accordingly, the Company expects the slow improving trend in profitability to continue in the next quarter, followed by a strengthening of the improving trend from 2025 onwards, and a strong market recovery and breakthrough earnings improvement in 2026.
In recent years, the Group has made significant investments in production development. The Group has significantly increased its capacity in the production of fiberglass mesh and diffusion roofing foils, which enables to serve the premium market with the highest quality standards. It has also expanded its insulation capacity in recent years with two new EPS and one XPS producing plants.
The ongoing fiber insulation factory joint venture projects offer the potential for further upgrading in
the medium term. The construction of the glass wool factory in Szerencs on 4,3 hectares with a HUF 5 645 billion non-refundable HIPA grant and 50% participation of the Polish company Selena FM S.A. is progressing according to plan. Production is expected to start in the first half of 2025. One of the main raw materials for the product is waste glass, which will be recycled in the production process according to the principles of circular economy.
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The financing structure and the budget of the rock wool factory in Halmajugra, built jointly with Market Építő Zrt, are still being finalized. This may result in production starting at a different time instead of the originally planned second half of 2025. The owners are examining the ideal timing of entering the market and are committed to ensuring that the investment is carried out at the highest possible level and efficiency.
MASTERPLAST PUBLIC LIMITED COMPANY
With a long-standing presence in the Ukrainian market there is also great business potential in the reconstruction of Ukraine for the Company, which could become exploitable in the medium to long-term depending on a potential ceasefire agreement.
Industrial environment
The external economic and industrial environment has a significant effect on the production and sale of the insulation and other construction materials, which are the main activities of the Masterplast. While the sale of the constructional and accessories products is mainly in relation with the new buildings market, the insulation related materials (primarily the heat insulation) depend on both the new building and home renovation markets.
As the result of the events of recent periods - the Russian-Ukrainian war, the pandemic measures, and the energy crisis -, the persistently unfavourable macroeconomic environment (high inflation and high interest rates worldwide) showed an improvement in the third quarter of 2024, as in the previous quarters, but with regard to the narrowed construction industry demand at the European level, it still did not bring a significant revitalization either in the new construction market or in the renovation segment. The third quarter also fit into this year's trend in terms of economics.
Due to the previous phase out of the building renovation support programs and the delay in the launching of new ones, the market was still characterised by wait-and-see attitude. There are no procurement difficulties, the supply of goods is good. As the result of these, the construction industry is characterized by fierce competition, where prices have dropped significantly.
In several European countries, the introduction of new economic policy measures to stimulate housing
construction and the stabilization of interest rates are only expected by 2025.
With the adoption of the EU's Building Energy Directive, building energy renovation programs in Europe became prospects, which means the revival of the renovation market in a short period of time. Within the modernizations, the focus is on the energy efficiency.
On the Hungarian market, the home renovation program was launched at the beginning of the second half of the year, available to the population under favourable conditions, with the expectation of energy savings, but unfortunately, due to the time-consuming application process, the demand fell short of expectations, and the rise is expected after further simplification of the program.
In Poland, the economic recovery stopped, and a decline was experienced in the construction industry, even though a record number of building permits were issued during the period.
In Romania, a general decrease was also observed overall in the construction industry not only in Q3, but for the entire year so far.
In Serbia, the National Bank further reduced the base interest rate, and the measures to help slow down inflation were also proving to be effective on demand.
It is an advantageous position for manufacturers that construction traders typically have low inventory levels before the economic cycle.
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MASTERPLAST PUBLIC LIMITED COMPANY
Analysis of turnover
Data in 1000 euros | Q3 2024 | Q3 2023 | Index | 2024 YTD | 2023 YTD | Index | ||
(A) | (B) | (A/B-1) | (A) | (B) | (A/B-1) | |||
Thermal insulation system | 18 428 | 21 121 | -13% | 54 | 659 | 62 | 365 | -12% |
Roofing foils and accessories | 6 418 | 6 969 | -8% | 18 | 521 | 19 | 166 | -3% |
Dry construction system | 2 168 | 2 761 | -21% | 6 | 932 | 9 | 398 | -26% |
Heat, sound and water insulation materials | 4 679 | 3 553 | 32% | 10 | 487 | 10 | 154 | 3% |
Building industry accessories | 1 022 | 1 254 | -19% | 3 | 049 | 3 | 658 | -17% |
Industrial applications | 3 006 | 2 643 | 14% | 9 | 253 | 8 | 974 | 3% |
Total sales revenue | 35 721 | 38 301 | -7% | 102 | 901 | 113 | 715 | -10% |
Source: the Group's IFRS consolidated non-audited accounts as at 30 September 2024 and non-audited accounts as at 30 September 2023, and non- audited data from the Group's management information system
70 000 | Turnover by product groups (tEUR) |
- 000
- 000
- 000
- 000
- 000
-
000
-
-13% |
-8% |
-21% |
32% |
2023 | 2024 | |||
2023 Q3 | 2024 Q3 | |||
-19% | 14% |
Thermal insulation Roofing foils and | Dry construction | Heat, sound and | Building industry | Industrial | |
system | accessories | system | water insulation | accessories | applications |
materials |
Source: the Group's IFRS consolidated non-audited accounts as at 30 September 2024 and non-audited accounts as at 30 September 2023, and non- audited data from the Group's management information system
Masterplast's quarterly sales revenue reached this year's highest level in the third quarter, although it was still 7% lower than in the base quarter, and 10% below 2023 on an annual basis. The Thermal insulation system product group accounted for more than half of the sales revenue. Here, the magnitude of the decline was similar both quarterly and annually. The turnover of self-produced EPS insulation materials and fiberglass mesh, which belong to this group, decreased to a greater extent, but overall, none of the product categories could grow in the current quarter.
Sales revenue also decreased in the product group of Roofing foils and accessories, as well as in the Dry construction system group. The Heat, sound, and water insulation materials group performed well, where Masterplast's recently introduced self- produced XPS product achieved outstanding sales growth. Sales of glass and rock wool also improved significantly.
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MASTERPLAST PUBLIC LIMITED COMPANY
Data in 1000 euros | Q3 2024 | Q3 2023 | Index | 2024 YTD | 2023 YTD | Index |
(A) | (B) | (A/B-1) | (A) | (B) | (A/B-1) | |
Hungary | 12 670 | 13 973 | -9% | 34 685 | 42 020 | -17% |
Export | 3 241 | 3 791 | -15% | 11 644 | 12 295 | -5% |
Poland | 4 099 | 3 475 | 18% | 10 371 | 11 080 | -6% |
Romania | 3 622 | 3 769 | -4% | 9 473 | 10 470 | -10% |
Serbia | 3 050 | 2 899 | 5% | 8 633 | 7 798 | 11% |
Germany | 2 634 | 2 444 | 8% | 7 785 | 7 750 | 0% |
Italy | 1 611 | 1 756 | -8% | 6 088 | 5 998 | 2% |
Ukraine | 2 312 | 2 860 | -19% | 5 815 | 6 362 | -9% |
Slovakia | 1 361 | 1 693 | -20% | 4 064 | 4 697 | -13% |
Croatia | 766 | 1 277 | -40% | 3 197 | 4 142 | -23% |
North-Macedonia | 355 | 364 | -2% | 1 146 | 1 103 | 4% |
Total sales revenue | 35 721 | 38 301 | -7% | 102 901 | 113 715 | -10% |
Source: the Group's IFRS consolidated non-audited accounts as at 30 September 2024 and non-audited accounts as at 30 September 2023, and non- audited data from the Group's management information system
There was also a decline in Building industry accessories products category. And regarding the Industrial applications products, the performance of
self-produced health industry raw materials improved, while the sales performance of other raw material commercial activities decreased compared to last year's base. The sale of limited marketable property rights (so-called HEM) appearing for the first time in the quarter was also reported here.
The breakdown of sales by country shows the revenue realized in countries where Masterplast has its own subsidiaries, regardless of which subsidiary made the sale in the territory of the given country. Sales in countries without subsidiaries are reported as Exports.
The Hungarian market accounted for a third of the Group's sales revenue in the quarter. This ratio has been decreasing from quarter to quarter, as even the third quarter was characterized by a wait-and-see attitude towards renovation programs in our country. Furthermore, the prolonged warm summer also affected the already weak demand in the first half of the period. Although sales fell by 9% compared to a year earlier, this is already a moderate decrease compared to the results of the previous periods.
In September, the Company launched a national facade thermal insulation discount program on the Hungarian market. Masterplast was the first to appear on the market with the Hungarocell Renovation Program, which is an innovative, new solution. If the conditions are met, the participants can purchase the Hungarocell EPS insulating material needed for the
facade thermal insulation of their homes at a 50 percent discount. The Company also participates in the insulation of the attic floor program available on the market together with its insulation partners. In connection with the programs, as a result of the energy savings, a right with a limited marketable property value is created, the so-called Certified Energy Savings (HEM). The HEM - certified directly or by Masterplast's partners indirectly - is sold within the framework of the EKR system to parties entitled to purchase HEM.
In Poland, a significant increase in sales revenue was achieved in Q3, where self-produced fiberglass mesh revenue increased. In Romania, the Company was only slightly behind the base level in terms of sales in the quarter.
The rate of growth in Serbia and Germany was also worth mentioning. In the case of Serbia, the self- produced XPS and diffusion roofing foil products achieved outstanding sales growth.
In the Export, Italian, Ukrainian, Slovak, Croatian and North Macedonian areas the income decreased in Q3 2024 vs Q3 2023.
Based on this, it can be said that although the Group's revenue has decreased compared to the base, the dropout rate shows an improving trend and considering the market composition is no longer general.
This quarter fit into this year's trend not only from an economic point of view, but also from the point of view of Masterplast's turnover. Although the
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MASTERPLAST Nyrt. published this content on October 31, 2024, and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on October 31, 2024 at 06:04:42.245.
