Cognor Holding (COG) Q3 2024 earnings summary

Executive summary

• Q3 2024 saw a net loss of PLN 30.4m, reversing from a profit in Q3 2023, due to lower spreads, higher costs, and market headwinds.

• Revenue for the nine months ended 30 September 2024 was PLN 1,735.4m, down from PLN 2,151.5m YoY, reflecting weak demand in construction steel.

• Net loss attributable to owners for the nine months was PLN 20.5m, compared to a profit of PLN 221.1m in the prior year, mainly due to lower margins and downtime costs.

• Major capex projects advanced, including modernization in Gliwice and Cracow and construction of a new LSM mill in Siemianowice Śląskie.

• Market conditions remain challenging, with the rebar market in crisis, but capacity utilization and output improved due to investments.

Financial highlights

• Q3 2024 revenue: PLN 498.4m (down 0.2% YoY); gross profit: PLN 1.7m (down 96% YoY); EBITDA: PLN -7.0m; net profit: PLN -30.4m.

• Gross profit for the nine months was PLN 50.8m, down from PLN 233.5m YoY; gross margin for the nine months was 2.9%, down from 10.9%.

• Net debt increased to PLN 545.1m, with net debt/LTM EBITDA rising to 7.6x; total interest-bearing debt was PLN 704.2m as of 30 September 2024.

• Cash flow from operations was negative in Q3, but improved to PLN 246.0m for the nine months; significant outflows for capex and working capital.

• Capital expenditures for the twelve months ended 30 September 2024 totaled PLN 536.7m, up from PLN 405.9m YoY.

Outlook and guidance

• Q4 2024 macro trends expected to remain unchanged; prices and spreads for scrap, billets, and finished products anticipated to stabilize quarter-over-quarter.

• Management expects Q4 2024 results to depend on product-to-material price relations, FX rates, and the geopolitical situation, especially the war in Ukraine.

• Cracow mill to reach full-scale production by year-end; further improvement in capacity utilization expected.

• EBITDA projected to improve sequentially from Q3 2024 but remain below Q4 2023 levels.

• No official forecasts were published for the year.