Gevorkyan reports 26% increase in sales, but profitability declines due to new orders
Slovakian firm Gevorkyan $GEV.PR, which specialises in the production of metal components using powder metallurgy, has released its financial results for the first half of 2024. The company reported an impressive 26.4% year-on-year increase in sales, which reached €47 million, 11.6% more than originally planned. This growth underlines the company's strong market position and its ability to expand, despite the challenges associated with new orders.
EBITDA rises, but margins fall
Despite the growth in sales, however, Gevorkyan saw a decline in profitability. Earnings before interest, taxes, depreciation and amortisation (EBITDA) increased by 6.7% to EUR 12 million, but remained below the originally planned EUR 12.6 million. EBITDA margin fell from 30.2% last year to 25.5% today. The company explains the margin decline by taking over production for new customers from former competitors in Poland and Sweden. These products were originally produced at a lower margin, which had a negative impact of EUR 1.2 million. Without this effect, EBITDA would have been EUR 13.2 million. The company plans to gradually increase the margin on these products.
One-off items and new customers impacted net profit
Gevorkyan also attributed the lower net profit to one-off costs related to the acquisition of new customers. However, these investments are seen as strategic steps that should bring higher profitability and growth to the company in the future.
Long-term contracts and expansion into new markets
In addition to the financial results, the company also announced the award of a significant long-term contract in the hydraulics sector. This order involves the production of precision components for metal injection moulding technology and is worth several million euros per year. The contract is for a period of 7 to 10 years and, according to Artur Gevorkyan, Chairman of the Board of Directors, will contribute significantly to the company's further growth. "This project is extremely interesting for us both from a technological and financial point of view," Gevorkyan said.
The company is also continuing negotiations with three Italian powder metallurgy companies. If these negotiations are successful, this could bring further revenue growth of up to €40 million.
Debt rising but outlook remains positive
Despite the successes, the company has seen an increase in net debt, which reached €75.3 million at the end of the second quarter, up from €72.8 million at the end of the first quarter. Despite this growth in debt, however, Gevorkyan remains optimistic about the future. The company has confirmed its forecasts for 2024 and plans further expansion through signed long-term contracts until 2027.
While Gevorkyan faces challenges in the form of lower profitability on some products, its strong market position, technological innovation and new orders ensure stable prospects for further growth in the coming years.
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