EXECUTIVE SUMMARY
ACHIEVEMENTS ABOVE EXPECTATIONS ..., IMPLYING A REVISION OF FORECASTS
A double “Price/Volume” effect raising revenue’s growth to +28%
At the end of the first two quarters of 2021, SNEP posted revenues up +19.3% and +38.6% respectively. Thus, the half-year turnover settled at MAD 517 Mn, i.e. an increase of +28.0%. This is an achievement rate higher than our initial forecasts, i.e. 55%.
This activity’s dynamic results from a double Price/Volume effect. On the one hand, we note an unprecedented surge in international PVC prices, with an average contribution of 62% to revenue.
Indeed, the average PVC price more than doubled from 758 $/T in H1-20 to 1,581 $/ T in H1-21. On the other hand, we note the recovery of Demand during the first half of the year against a net decline during H1-20.
A profitable gross margin of 39%, up +8.8 points
Driven by the surge in international PVC prices, the gross margin reached a high level of 38.7% in H1-21 against 29.9% in H1-20. This is an increase of 8.8 points. In this context, the EBIT shows a more sustained increase than that of the activity, i.e. +53.4% to MAD 88 Mn.
However, we note a doubling of other external expenses from MAD 29 Mn to MAD 59 Mn over the studied period. An evolution justified by a non-recurring increase in maintenance costs. To this end, the increase in the operating margin was relatively limited, i.e. +2.8 pts to 17.0%.
In the end, the net income jumped by +57.9%, from MAD 35 Mn in H1-20 to MAD 55 Mn in H1-21.
An achievement above our initial forecasts which anticipated an annual profit of MAD 90 Mn, i.e. a high achievement rate of 61%.
Toward a revision of our growth forecasts over the period 2021-2023
On August 24th 2021, SNEP announced the suspension of its sales of vinyl products, chlorine and hydrochloric acid, due to the decision of the competent authorities to direct all oxygen production to the Kingdom hospitals. Today, we believe that the improvement in the sanitary situation in recent weeks has allowed the operator to return to its normative pace of production.
The sustainability of PVC average prices above 1,550 $/T during the second half of 2021, combined with the entry into production of the new investment project during Q2-22, require a revision of our growth scenario for SNEP.
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