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Selena Group: financial results for Q1 2020

2020.06.17

Selena Group, one of the leading producers and distributors of construction chemicals and the owner of the TYTAN brand – posted a net profit of PLN 5.2 million in the first quarter of 2020. In this period, revenue exceeded PLN 282.2 million, up 4.3%. EBIT was PLN 9.1 million, down 10.1% year-on-year. In the first quarter, the global coronavirus pandemic did not have a major effect on the Group's financial results, but the company is already observing the outbreak’s increasing adverse impact on the construction materials market in all the countries in which the Group operates.

In the first quarter of 2020, Selena Group’s revenue growth was mainly driven by the sales of innovative high-margin products. In this period, gross profit margin was influenced by favourable raw material prices. Lower operating profit is the result of other operating activities.

The company estimates that the coronavirus pandemic had a lower impact on the construction industry compared with other sectors – many of the projects started in the first quarter were not put on hold, and construction works in most markets continued on schedule. However, the company has also noted a reduction in the number of new projects – and this fact will have a significant impact on the construction industry in 2021 and 2022. Selena Group benefits from government support programmes in most of the markets in which it operates, including in China, Italy, Spain, the United States and Poland.

Krzysztof Domarecki, the CEO of Selena Group“Selena Group’s business has been protected by geographical diversification. As a result, the periods of shutting down the economy and emerging from the pandemic varied from one country to another. In the first quarter, the epidemic was only gaining strength in many markets, so it did not affect our performance in that period. By the time Europe was closing its borders, China was already beginning to ease restrictions in its economy. The situation is similar now: as Europe is restoring the activity of individual sectors, the epidemic is unfolding in the east, specifically in Ukraine and Kazakhstan. This allows us to use our experience in relation to increased safety measures in individual markets in which we operate. Understandably, at the beginning of the year we implemented detailed procedures to protect our employees and contractors. We expanded the scope of teleworking, which is a standard in Selena Group due to the international scale of our operations. It was critical for us to maintain efficient production, supply logistics and deliveries, both with regard to raw materials and our own products. With the technology and system solutions that we have been deploying for years, we have been able to manage logistics smoothly and without any disruptions. Technology will be gaining in importance – both in the context of future global epidemic threats, and due to changes in the construction industry. Selena has been making preparations for such a situation for years by developing and implementing innovative products which facilitate and accelerate the building process. Since 2019, we have been executing an ambitious development strategy, which was reflected in the Group's financial results for 2019. The global epidemic might put these plans to a test, but it is still much too early to make any assessments. What is important is the strong support from governments around the world to help businesses to function and to protect jobs. In addition, central banks have undertaken liquidity support measures in internal markets”, Krzysztof Domarecki, the CEO of Selena Group, summed up.

In the first quarter, the Selena Group successfully adapted its raw materials procurement procedures and channels to the new requirements arising from the global epidemic. That has helped it maintain a smooth ordering process, with inventories being even increased with respect to some suppliers or geographical areas. An example of how effectively the Group adapted to the situation and responded fast to change is the launch of production of the TYTAN HEALTH hand sanitizer gel – the raw materials not available in Poland were imported from Europe and China, and the technological line of the Libra production plant in Dzierżoniów was retrofitted to suit the sanitizer production requirements. The continuity of work in logistics and sales is also maintained. Online channels have been strengthened to foster customer relations. The Customer Service Department is constantly verifying the availability of the product offer in all the markets in which we operate.