Podravka 3Q 20 - Resilient top line, profitability pressured by RUB depreciation
3Q 20 wrap-up: Podravkas business model proved to be resilient on negative developments in the Croatian tourism sector, as the company is mainly oriented towards retail customers (i.e. a limited exposure towards HoReCa customers). On the other hand, negative FX differences on working capital movements (HRK 28 mn) more than outweighed, on the EBIT level, positive effects from the side of cost cutting measures. The rationale is a heightened geopolitical risk in 3Q 20 that led to a significant pressure on the Russian rouble. Contrary to our expectations, unfavourable trends in prices of raw materials and supplies, in the Food segment, continued in 3Q 20 (negative HRK 8 mn). Thus, Podravka missed our expectations on the EBITDA and bottom-line level, as reported FX differences on borrowings were in line with our expectations.
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