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COMPA S. A. - CMP

H1 2018 report

Release Date: 8/14/2018 7:13:37 AM

IRIS Code: C16B5

To:

FINANCIAL SUPERVISORY AUTHORITY       - Financial Instruments and Investments Sector

BUCHAREST STOCK EXCHANGE                   - Regulated market

 

1 st H Report according to Financial Supervisory Authority Regulation no. 5/2018 (Annex 14) regarding issuers and operations with securities

 

Report date: June 30 2018

Name of the issuing entity: COMPA S.A.

Social headquarters: Sibiu, no.8,Henri Coanda Street, Postal code 550234

Phone number: +40 269 237 878

Fax number: +40 269 237770

VAT no: RO 788767

Registration number in the Trade Registry: J 32 / 129 / 1991

Subscribed and paid share capital: 21.882.103,8 RON

Regulated Market on which the issued securities are traded Bucharest Stock Exchange,  Standard Category, symbol CMP

LEI Code 315700EXV87GJDVUUA14

The most important events that occurred in the 1st H 2018 are:

  • In the 1st semester of 2018 the upward trend in manufactured goods production and turnover of over 8% has continued.
  • Higher increases in manufactured goods production and turnover during this period (semester I 2018) were recorded in the following areas:

- Production of components for turbochargers;

- Production of mechanical-welded assemblies for lifting equipment and machines;

- Production of machined parts;

- Production of steering gear pinions.

-           The volume of production was maintained at the level recorded in the same period of the previous year (1st semester 2017) except the following areas, where a slight decrease was registered:

- Production of components for Common Rail injection systems;

- Production of components for windscreen wipers.

-           One of the most serious issues COMPA has been facing during the analyzed period (1st semester 2018) is an acute shortage of labor force.

The highest staff fluctuation was recorded for skilled and unskilled workers, where the number of departures for various reasons was significantly higher than in previous years

In this context, staffing requires huge efforts and costs on the part of society. Major efforts are made by the company's management for the robotization of workplaces, especially in the field of welding because of serious lack of welders. This action has notable effects in relieving the personnel and placing it in other workplaces where there personnel is needed;

  • The efforts of the company's management continued also this semester in the field of cost reduction in all sectors of activity; the improvement system has been diversified and expanded both by reducing the company's costs and, at the same time, by financial stimulation of the employees whose projects provide financial advantages for COMPA.
  • The company's development process continued through investments dedicated primarily for the purchase of high performance machinery and equipment for ensuring production capacities especially for products with medium and long lifetime.

In the first 6 months, the value of investments made exceeded 19 mil. Lei (about 4 mil. Euro) and the upward trend continue in this field also in the 2nd semester of 2018.

Analyzing the evolution of the main elements of the patrimony, we can specify the following:

  • Assets held on June 30, 2018 compared to the same period of the previous year (June 30, 2017) registered a small increase of 4.24 million lei (101.18%). This difference comes mainly from the group Property, plant and equipment, where the investment inflows were higher than the outflows through depreciation;
  • Current assets as at June 30, 2018 compared to the corresponding period of last year, had an increase of over 40 million lei, respectively 13.06%.

The increase in the current assets within the limits of increase of turnover is normal, in line with the expectations. In the structure of current assets, the highest increase was registered at the end of the 1st semester of 2018 to the  group Trade receivables;

Analyzing the causes of these increases in the volume of receivables, we find that these were more or  less objective:

- Objective causes: 

     - Increase in production and turnover, in the share of invoices with payment term above the average (Honeywell, Haulotte) in the total value of invoices in the 1st semester of 2018 as compared to the corresponding period of the previous year; 
- Subjective causes:
- Dysfunction of the IT system at one of our major partners, which has led to the impossibility of making payments to suppliers;

The other categories of current assets are stocks, they have been correlated with the evolution of turnover.

<>--Turnover increased by 30 million lei, respectively, by 8.23% compared to the first 6 months of the previous year 2017;
  • Operating income had a similar evolution.

The main production sectors in the company's activity that have registered higher increases are:

  • Production of components for turbochargers;
  • Production of mechanical-welded assemblies- mainly for machines and lifting equipment
  • From the operating costs category we can highlight:
  • Increase in the 1st semester of 2018 above the level of income increase for the following cost categories:

- The cost of materials generated by  price increase on the steel market;

- The increase in costs with salaries as a result of the permanent pressure in this field due to the limited labor force in Sibiu area and surroundings;

- The following costs have decreased:

  • Depreciation of tangible assets
  • Other operating expenses
  • The operating result amounting to RON 30,671,670 registered in the 1st semester of 2018 by 26.44% higher than that registered in the same semester of 2017 was exclusively influenced by the measures taken by the company's management regarding improvement projects on cost reduction  in most areas and sectors of activity;
  • The financial result obtained in the 1st semester of 2018 is sensitively different from that obtained in the 1st semester of 2017. Despite the reduction of interest costs as a result of diminishing accessed credit lines, exposures to banks and negotiations with financing banks to reduce the cost of financing, these positive effects (obtained during this period) could not counteract the negative impact of the modification of the exchange rate in the first half of 2018;
  • The gross result of RON 29,640,891 obtained in the first half of 2018 is 21.76% higher than the one achieved in the similar period of 2017, exceeding the increase in turnover for this period.
  • The net result obtained in the 1st semester of 2018, even if it did not benefit from the reinvested profit at the level of 1st semester of 2017 was, however, higher by 19.17% than that obtained in 1st  semester of 2017
  • Analyzing briefly the results, synthetically reflected in the profit and loss account of the 1st semester of 2018, one must emphasize the permanent and sustained concern of the company's management for the implementation of cost-cutting measures, for the development and implementation of improvement projects extended at the level of the entire activity of COMPA.

Analyzing the cash flow at the end of the 1st semester 2018 we can highlight the following:

  • The following had a major impact in generating a positive cash flow:
    • Net profit of this period;
    • Depreciation included in the price of the products;
  • Items with negative impact on cash flow were:
    • Variation of receivables;
    • Acquisitions through investment in fixed assets, especially of tangible assets;

Analyzing the cash flow as a whole for the 1st semester of 2018 one can consider it to be positive.

Cash-generating factors: depreciation and, above all, net profit, had a positive impact during this period in securing the financial resources to access credit lines and exposures to financing banks as low as possible.

The liquidity of a company is its ability to have the necessary funds to carry out its economic and financial activity, the ability to make payments on time to the state budget and to suppliers.

The current liquidity index of 2.03 achieved in the 1st H 2018 is a good liquidity index, (having a level similar to that recorded in the two semesters of 2017).

Income from the main activity obtained in 1st semester of 2018 had a relatively similar evolution to the turnover of the same period:

  • The revenues from the production sold in amount of 393,398,012 lei are by 29,409,501 lei higher than those obtained in the 1st semester of 2017, with a percentage increase of over 8%
  • Revenue from the sale of goods has increased.
  • Income decreased in the 1st semester of 2018 as compared to 1st semester of 2017 from the production of fixed assets and other operating income

During the 1st H 2018, COMPA did not carry out major transactions with affiliated companies in its Group or with other companies holding shares in COMPA S.A.'s share capital.

Entities affiliated with the company were formed in time, due to   COMPA S.A.’s need for outsourcing some specific activities like: software design, domestic and international road transport, catering, etc.

The majority of transactions and contracts with these affiliated entities are for the provision by COMPA (the owner of special and specific installations) of utilities such as: electricity, heat, drinking water, telephony services, compressed air, rental of premises and equipment necessary for carrying out the activity, as well as supply contracts for goods and services.

On the other hand, these affiliated entities provide COMPA with the goods and services they produce and for which the outsourcing was imposed.

The relations were carried out in commercial terms of the free market, their price being negotiated at market levels.

For details, please consult the file in .pdf format.

 



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