Successful Operation in an Unpredictable Environment

Record quarterly EBIT performance with EUR 10.3 million, financing guaranteed for strategic development plans by successful bond issuance Budapest – these are the main points in Waberer's International reporting its financial results for the three months and half year that ended on June 30, 2022.

The report states that the company’s revenue increased by 15.5% in the second quarter of 2022 on a year-on-year basis and reached EUR 173.2 million, while year-to-date Group level revenue reached EUR 332.1 million which is a 13.6% increase compared to H1 2021. Quarterly revenue increase reflects 24.1% growth in the ITS and 10.4% in the RCL segment, while revenue of the Other segment decreased by 7.6% on a year-on-year basis caused by the depreciation of HUF compared to EUR.

Revenue increase of logistics related segments is partly due to the more favorable service prices and due to the contract-based price correction effect of the fuel price increase, while the Company has been very successful in reflecting the hectic changes of operating costs (energy, wages, spare parts costs, etc.) in its service prices, which is essential for profitable operations in the current environment.

Recurring EBIT reached EUR 10.3 million in Q2 2022 which is a 33% improvement compared to Q2 2021 and the highest value since 2016. As a result of a EUR 1 million year-on-year improvement, ITS segment reached EUR 1.7 million quarterly EBIT, Other segment reached EUR 4.6 million EBIT that is a EUR 1.7 million improvement, while RCL segment’s EUR 4.0 million quarterly EBIT is roughly the same level as in the second quarter of 2021. Group level EBIT in the first half of 2022 was EUR 14.8 million.

Recurring net income changed to EUR 2.5 million in the second quarter of 2022 which is a EUR 3.6 million decrease on a year-on-year basis. Net income decrease is mostly due to the non-realized, non-cash financial loss generated by FX changes (EUR 3.5 million), non-cash deferred tax (EUR 0.6 million) and higher interest cost as a result of the bond issuance.

Net financial indebtedness – due to cash-based investments (mostly fleet replacement), the relaunch of fleet renewal program and some non-cash technical items (update of warehouse rental fee capitalization and cash collateral for bank guarantees totaling EUR 16.3 million) – increased by EUR 33.8 million compared to the end of Q2 2021 and reached EUR 149.2 million. The net leverage ratio on 30 June 2021 increased to 2.0x LTM (Last twelve month) recurring EBITDA (31 March 2021: 1.7x) because of the higher net indebtedness. The corporate bond issued in the value of EUR 111 million in the 2nd quarter of 2022 did not significantly influence the Group net indebtedness position until now.

The Management states that neither the war in Ukraine, nor the increasing inflation generated significant industrial production or retail trade decrease in the relevant European countries, so Waberer's was able to manage temporary fluctuations in demand through its diversified customer and service portfolio; ▪ the economic forecasts of recent weeks show a steadily worsening trend for both Western Europe and Hungary, which may pose a risk to the sustainability of the current performance level, however our public EBIT forecast is still considered as achievable; and Waberer's has proven in the recent period that it has the flexibility and quick decision-making ability needed to operate successfully in the current unpredictable economic environment.

Zsolt Barna, CEO of Waberer's International commented that “in a challenging and unpredictable environment, the Group's quarterly EBIT performance of more than EUR 10 million is the highest in recent years. Certain regulatory driven negative cost effects (minimum wage change and change in wage related tax rules) impacted our results from the beginning of the year. As indicated in our Q1 report, it was possible to manage these effects from the second quarter onwards. As a result of this successful work, all 3 segments – including the International Transportation segment - achieved positive EBIT levels in Q2 2022 with an increase of EUR 5.7 million compared to the previous quarter (Q1 22), and EUR 2.6 million compared to the same period in 2021. This result proves once again that the strategy and diversified activity chosen by the Group can be successfully managed in a challenging environment. Our successful quarterly performance is based on continuous and active adaptation, including responding to ongoing changes in operating costs and periodic fluctuations in order volumes, in which we have been very successful in both our ITS and RCL segments."

He adde that "the arrival of the first group of overseas drivers from India during the quarter was an important step in the life of the Group. It opens the door to a labor market of a size that can offer a long-term solution to the challenges of the labor market. Our new colleagues are highly committed to WABERER'S and to their work. After learning the European transportation specialties, they will be useful members of our community and can provide a long-term solution to the labor shortage, which is perhaps the biggest challenge facing the industry today. It can be a competitive advantage for WABERER’S to be able to recruit colleagues from regions that our competitors with smaller operations cannot.”