Event: 4Q22 results’ forecasts.
On April 26 Action will release its 4Q22 financial results. Based on reported monthly sales and gross margin on sales we forecast a single-digit yoy decline of revenues in 4Q22. Despite a high margin on sales maintained we expect a deterioration of 4Q22 operating figures due to falling revenues and growing pressure on a cost of sales.
Based on the reported data for October, November and December we forecast a 4% decline of revenues yoy to c. PLN 676.7 million; we expect decreasing sales of IT equipment on the one hand, while on the other a growth of sales of the remaining offer. In October/ November/ December Action reported a 7.5%/7.8%/8.0% gross margin on sales vs 7.8%/7.7%/7.7% a year ago (preliminary data). We assume that the final gross margin on sales in 4Q22 will be higher than the data reported monthly (which was the case in previous quarters) and we forecast it at 9.0% vs 9.1% in 4Q21.
Given (i) a 4% yoy decline of revenues expected (negative operating leverage effect), (ii) increasing pressure on a cost of sales (costs of logistics, packaging (stretch foil and cardboard) and of salaries) on the one hand with (i) positive effects of the ongoing restructuring and (ii) high gross margin on sales we forecast the Company’s adj EBITDA at c. PLN 22.9 million (down 19% yoy) and adj EBITDA margin at 3.5% (down 0.6 pp yoy). Assuming D&A at c. PLN 2.2 million we expect 4Q22 adj EBIT to reach PLN 20.7 million (down 22% yoy). We expect the effective tax rate at 19% and thus forecast Action’s 4Q22 NI to arrive at c. PLN 16.3 million (down 29% yoy).
Given our 4Q22 results expectations we update our financial forecasts for 2022 and onwards (table below).
Expected impact: Depending on the divergence between reported results and our expectations.
Analyst
Jakub K. Viscardi
GPW’s Analytical Coverage Support Programme 3.0
This report is prepared for the Warsaw Stock Exchange SA within the framework of the Analytical Coverage Support Program. 3.0.
71/2023/AR February 3, 2023
