4Q23 financial results preview. The 4th quarter is seasonally strong in the fish processing industry due to increased shopping in the preChristmas time and generally bigger demand for fish products in the autumn and winter. We expect sales to be flat yoy on the back of expected flat yoy sales volumes and lack of price upgrades declared by SEKO.
4Q23 profitability should be supported by PLN strengthening vs EUR (fish SEKO purchases made in EUR) and we expect decent margins, though not above the 4Q22 level that was unusually high (4Q22 EBITDA margin stood at 13% while historically it was c. 10% in 4Q). 4Q23 net profit may be lower yoy due to the high base effect
FY financial forecasts. We expect FY23 revenues/ EBITDA/ EBIT/ NI to reach PLN 258/ 22/ 15/ 12 million.
■ 2024 outlook. We expect the Company’s sales volumes to return to growths along with gradual improvement of consumers’ purchasing power which should impact positively next year’s reported sales. The launch of a cogeneration system will lower energy costs which should exert the positive impact on the Company’s margins. T
he relative EUR/PLN rate stabilization (without strong growths) will be also favorable for SEKO’s margins (especially in 1Q24, as the EUR/PLN rate in 1Q23 was materially higher than currently). On the flip of the coin, another minimum wage rise (from January 204) will burden the profitability. It should be remembered that in the beginning of 2023 the Company obtained a subsidy from the program ‘Fishing &Sea’ that boosted 1H23 financial results (PLN 1.3 million) which may not be the case next year (SEKO may obtain a lower amount or no subsidy at all). Given all the considerations above, we expect a slight normalization of margins and profits in 2024, albeit they should be still deemed very good in comparison to historical figures.
■ The risk to the financial forecasts. Moderate. The visibility of the Company’s results has grown along with the normalization of raw materials prices.
■ Dividends. SEKO traditionally pays out about a half of its profits in the form of dividend. This year’s expected record high results should enable a high dividend payout next year which we estimate at PLN 0.92 per share. ■ Financial forecast changes. We incorporated actual 3Q23 financial results into our forecasts. Changes are negligible.
■ Valuation. We maintain our 12M EFV for SEKO at 16.3 zł per share.
