Karelia Tobacco (KARE) Q2 2024 earnings summary

Executive summary

• Net turnover for the first half of 2024 increased by 12.7% year-over-year, reaching €147.1 million, with gross turnover up 13.9%.

• Net profit after tax and non-controlling interest rose 38.2% to €59.2 million compared to the same period last year.

• Growth was driven by a 9.5% increase in cigarette volumes in both Greek and international markets, stable roll-your-own tobacco volumes, and higher factory prices.

• Positive exchange differences of €7.1 million contributed to financial results, reversing a negative trend from the prior year.

Financial highlights

• Turnover (net of excise tax and VAT): €147.1 million, up 12.75% year-over-year.

• Results from operating activities: €56.0 million, up 13.36%.

• Net financial result: €12.3 million, up 69.96%.

• Profit before tax: €75.4 million, up 39.05%.

• Net profit after tax: €59.2 million, up 38.16%.

• Basic and diluted EPS: €21.4540 (vs. €15.5279 in H1 2023).

• Gross profit margin slightly decreased to 47.06% from 47.5% due to higher raw material costs.

Outlook and guidance

• Cigarette shipment growth is expected to continue in H2 2024, but at a slower rate due to high Q4 2023 base.

• Roll-your-own tobacco volumes are projected to remain stable year-over-year.

• Anticipated further cost increases from higher-priced tobacco stocks may pressure gross margins.

• Market share gains expected in Western Europe and the Balkans, with new distribution in Croatia and higher demand in North Africa.

• Excise tax increases in EU accession countries and regulatory changes may impact demand and margins.