TeraPlast Group turnover reached 711 million RON, up by 16 percent in 2022

2022 was the second-best year in the history of TeraPlast Group, after the record levels of 2021. The company has managed to consolidate its market share in 2022. The major investments completed during 2021-2022, in the amount of 219 million RON, are added to those made in recent years with the aim of diversifying the lines of work, the geographical footprint of the Group, increasing the energy independence and to substitute virgin raw materials with recycled material.

For the current year, TeraPlast Group is targeting significant increases in financial performance, estimating an acceleration of infrastructure works, expected at the beginning of Q3/2023 at the latest.

The turnover of TeraPlast Group increased in 2022 by 16 percent compared to 2021, reaching 711 million RON. EBITDA stood at 52.7 million RON, down 29 percent compared to the previous year’s result, because of the volatility of raw material prices and a below-estimated level of water & sewage works financed from European and public funding.

The Installations & Recycling segment – “the engine of the Group” – despite the most challenging year in the last 5 years, managed to exceed the record EBITDA achieved in 2021. It generated about 97 percent of the consolidated EBITDA against the background of the increased time needed to reach the “breakeven” of new investments, aimed at diversifying the Group’s business portfolio.

The EBITDA margin eroded during the year and reached 7.4 percent at the end of 2022. The result was marked mainly by the challenges faced by the Windows & Doors and Flexible Packaging segments, where delays in indexing the selling prices were experienced, respectively high ramp-up and market penetration costs.

The Installations and Recycling segment maintained a positive trend compared to the record result of 2021: EBITDA improved significantly in absolute amount and reached 51 million RON. The EBITDA margin remained solid at 10.4 percent for the full year 2022.

The turnover of this segment increased by 20 percent compared to 2021, up to 488 million RON. Although the turnover of the Installations segment increased due to inflation, volumes stagnated compared to 2021, which generated pressure on the margin, respectively the partial transfer of costs to the market. The objective achieved in 2022 was the consolidation of the market share, the leading position being essential for the fruition of business opportunities once the activity in the field picks-up.

The Compounds and Recycling segment faced an atypical situation in the market, with the occurrence of disruptive factors, impossible to anticipate. Against the background of increased energy costs in the European Union, significant differences in quotations have appeared between raw materials in the EU, including Romania, and those outside the European Union. This climate put pressure on margins, but the Group focused on preserving its market share and maintaining its leading position in this segment. The background left traces in the evolution of the turnover of the Compounds segment and caused a reduction of EBITDA by 53 percent compared to 2021. The margin upheld at 10.1 percent, above the TeraPlast average.

The Windows & Doors business line, managed by TeraGlass, had a turnover increasing by 30 percent, determined inclusively by the increase in sales volumes. The segment faced rapidly increasing raw material prices, the biggest influences being felt in PVC window profiles and glass. The Group’s ability to pass on these costs up the value chain has been limited as the customers are Europe’s large DIY chains with considerable bargaining power. As a result, margins suffered, and EBITDA for this business line sawa 65 percent contraction compared to 2021.

The Flexible Packaging segment was heavily burdened by the lack of optimal loading of the production lines. The quantities produced in 2022 are half of the production capacity. Product approval expenses, translated into small production batches, also contributed to the inefficiency of the business line. Profitability of this new division within the Group requires more time than initial estimates. However, in the second half of 2022, some industrial products were approved and contracts with large retail chains became effective, including on foreign markets, which indicates an increasing trend.

The net profit of 2022 was almost 15.4 million RON, down 64 percent compared to the exceptional result of the previous year. The evolution was determined, on one hand, by depreciation costs, against the background of the increase in the Group’s asset base following the large investments made, and, on the other hand, by the increase in interest rates for RON, which for the Group meant an additional expense of 8.3 million RON in 2022 compared to 2021.

“We draw the line after a difficult year, full of challenges that tested our skills in managing complex situations. Although some segments performed at a record level, the consolidated result bears the imprint of the period we went through. We kept our focus on growth, despite the challenging environment, to continue delivering growth to our shareholders. Even though profitability was below expectations, we have the basis to deliver results as the general landscape begins to mend.” said Ioana Birta, financial director of TeraPlast Group. “At this point we consider that the hard part is behind us, and the current year will bring a revival, a resettlement, a better context in terms of price volatility, things that prepare the next period of growth. We aim for growth in all segments, and we know that the effort will be sustained by the TeraPlast Group team, so in the current conditions of predictability we are confident of reaching the budget.” Birta continued.

“We learned from the lessons of 2022 regarding forecasting in conditions of economic unpredictability, constantly aiming to excel in results compared to 2021 which was the absolute record at Group level. Therefore, the 2023 budget remains challenging and we aim to slightly exceed the record EBITDA achieved in 2021, relying also on the normalization of business segments aimed at diversifying our businesses. We expect an improvement in our lines of work in the second part of 2023.” concluded Ioana Birta.