Earnings call transcript: Teraplast Bist sees strong Q2 2025 growth

Teraplast Bist reported a robust financial performance in Q2 2025, marked by a significant increase in revenue and a positive net result. Consolidated net sales climbed 29% compared to the first half of 2024, reaching 552 million lei. The company’s EBITDA rose by 74% to 47 million lei, with an improved margin of 8.5%. According to InvestingPro data, the company maintains impressive gross profit margins of 67.9% and operates with a moderate level of debt. Despite challenges in the packaging segment, Teraplast Bist continues to expand its geographical footprint and diversify its offerings. The stock price saw a modest increase of 2.97%, closing at 0.422, reflecting investor optimism about the company’s strategic initiatives. InvestingPro analysis indicates the stock is currently trading near its Fair Value.

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Key Takeaways

• Consolidated net sales rose 29% year-over-year in H1 2025.
• EBITDA surged 74% to 47 million lei, with a margin improvement.
• External sales doubled, contributing to a positive net result.
• The stock price increased by 2.97%, suggesting positive market sentiment.
• Expansion into biodegradable packaging and new markets is underway.

Company Performance

Teraplast Bist demonstrated strong performance in Q2 2025, with significant growth in both revenue and EBITDA. The company’s strategic focus on geographical expansion and product diversification has begun to pay off, as seen in the doubling of external sales and the positive net result of 3.4 million lei, a substantial recovery from a loss of 6.6 million in 2024. The Romanian infrastructure market’s growth also contributed positively to the company’s results.

Financial Highlights

• Revenue: 552 million lei, up 29% year-over-year.
• EBITDA: 47 million lei, a 74% increase from H1 2024.
• EBITDA margin: Improved to 8.5%.
• Net result: Positive 3.4 million lei, compared to a loss of 6.6 million in 2024.
• External sales: Increased from 100 million to 200 million lei.

Outlook & Guidance

Teraplast Bist remains cautiously optimistic about the future. The company targets a 14% profitability in the installation segment and plans to reduce its leverage ratio below 4 by the end of 2025. A budgeted CapEx of 65 million lei is set for the year, with expectations of a 6.5 million lei subsidy for a photovoltaic plant. However, the packaging segment remains challenging, and the company is focusing on innovation and market expansion to navigate these difficulties.

Executive Commentary

• "We had a very dynamic infrastructure segment in Romania," noted a company executive, highlighting the robust growth in the domestic market.
• "The packaging segment continues to be the most challenging," another executive stated, acknowledging the ongoing difficulties and the company’s efforts to innovate.
• "We are still presenting a profit of 3.4 million lei," CFO Bogdan emphasized, underlining the company’s financial turnaround.

Risks and Challenges

• Packaging Segment Challenges: Continued difficulties in this area could impact overall profitability.
• Raw Material Costs: Decreasing costs could affect pricing strategies and margins.
• Market Expansion Risks: Entering new markets involves uncertainties that could affect performance.
• Polymer Market Weakness: Poor demand in Western Europe could impact sales and growth.
• Macroeconomic Pressures: Broader economic conditions could influence the company’s financial health.

Teraplast Bist’s Q2 2025 results reflect a company on the move, with strong financial performance and strategic initiatives aimed at long-term growth and diversification. Despite challenges in certain segments, the company’s proactive approach and market expansion efforts position it well for future success.

Full transcript - Teraplast Bist (TRP) Q2 2025:

Company Executive/Moderator, Theraplas Group: Good afternoon. Welcome to the conference call for the second quarter results of Theraplas Group. I see that not all have joined. Let’s let’s take a couple of minutes before we start so we we give a chance to other people to join to join this call, and we’ll start in in two minutes. Thank you very much.

Hello again. Okay. Let’s let’s start. We had quite interesting first half of the year, a little bit above our expectations. Not much has changed in terms of group structure.

The only news is that starting with the second quarter, we started to also consolidate Aquatica Experience, a company that we bought at the beginning of this year and closing took place in April. So we have a bit of their financial results now consolidated statements for this year. For the second quarter, not much yet, but, of course, we hope they will have a decent contribution until the end of this year. Other than that, we have our installation business, which is done by the mother company, Terra Plus, Palplus from Republic Of Moldavia, Politec, and promoting in Hungary, Austria, which are all active in in the package in the installation segment. Then we have the packaging segment, which comprise of Therabio and Therapack, also OPALA, our stretch film brand, and Optiplus from Croatia.

The first three of them being from Romania. Theraplast Recycling, which is which is the recycling company of our group. And their their p and l is shown with the installation and compound segments. And last but not least, Theraglass, which is the largest exporter in the group by share of of turnover, but nevertheless, a a small business for for us. As I said, we had a very dynamic infrastructure segment in in Romania for the first half of this year, which even the macroeconomic data showed this with a growth of close to 40% of of engineering works.

Although other segments of the construction industry have not performed as as well as the infrastructure, we still see a a decent growth in construction in Romania. We also see a very positive impact from from Hungary and from Republic Of Moldavia in our p and l because we start to see the results of the acquisitions that we made last year. There, we also strive to increase our market share and to create dedicated sales structures in Germany and to increase the market share in Austria. We invested heavily in in people on on those markets at the beginning of this year, but, of course, that’s that’s a little bit longer term. We expect the results to come starting next year.

On the less positive side, we have the packaging segment, which has seen challenges in terms of volumes throughout, throughout Eastern Europe, and this manifest itself into into lower thicknesses in in packaging material, which led to lower tonnage, which somehow impacted the even the bottom line and delayed the this business segment becoming profitable, but we are taking active measures both in terms of operation as well as in terms of staffing and especially management staff in in this business in order to to get it to where it should be, namely in a consistently profitable area. In Theraglass, we see we see on one hand an increase in sales, especially domestic sales as it is our policy to reduce dependency on large DIY chains. But we still have to work on improving the profitability of this business segment. Last but not least, compounds have a performance somehow in line with last year. We have an increase in exports.

We have a somehow slower domestic market, but still still a cost is done segment, which which contributes positively to to our bottom line. Another another good news as which we see as manifesting the implementation of our strategy to reduce dependency on the Romanian market in general and Romanian infrastructure market in particular is the increase of external sales, which means both the sales from our subsidiaries as well as export from the mother company to foreign markets. They almost doubled from 100,000,000 late to close to 200,000,000 late, and they reached a percentage of 35% of the total turnover. The this was due in part to an increase in volumes of 18%, but also with the adding of of the new businesses, which in all contributed to a 30% increase of the turnover. And what’s more encouraging, a 74% increase of EBITDA.

An EBITDA margin of 8.5% overall, including the losses in the packaging sector. If if we look just at the installation segment, went back into the double digit profitability margin. We are close to 11%, and we are well on on track to to reaching, let’s say, the usual profitability levels of close to 14% that this business should should bring. We have a positive net result as opposed to a loss in the first half of last year even though we we took a significant hit from from the forex, which amounted to a to a cost of close to 5,000,000 lay. Again, we still managed to be in the positive, even, considering that forest forex, impact.

The reasons why why we grew is because we grow we grew volumes and because we purchased the new businesses. The volume increase contributes to 40% of the total increase, and the new business contributes to 16%. We had also depreciation of our sales prices, not margin, sales prices because of the decrease of raw material costs, polymer market has been suffering from poor demand throughout Europe, especially Western Europe. Therefore, polymer producers has have decreased prices, in the first half of this year versus last year. So, we were also forced to to take some of this price decrease and and get, get in the market.

But, the margin the gross margin has actually increased because we saved some some of it for for ourselves. Again, I’d like to point out that, we have a tight situation or tighter situation in the packaging market, especially in, in the in the blown film business, Therabio, Therapac, and, to a lesser extent, the Croatia, where we saw decreases in volumes. Okay. One of the reasons being that we also shut down the factory, which had its its share of volumes, but also because of shrinking demand in the market in this period for for this type of packaging. We are trying to to switch more and more to biodegradable packaging by going to tenders organized by large retail chains and increasing our geographical footprint.

But I I would say that the the packaging segment continues to be the most challenging segment in our in our business portfolio and will continue to be so for the next quarters. However, the fact that we are benefiting from experience of for of OPPLUS from Croatia, which translates into better recipes, a larger market access, into even personnel. Croatian staff working for the Romanian companies is creating a plus and is, easing our way towards the, getting this business into the profitable area. Now for for details in in the financial segment into the segments and into the other aspects of the financial reporting, I will hand it over to Bogdan, our CFO, who’s going to go through the details, and then I will be back for the q and a.

Bogdan, CFO, Theraplas Group: Hello to everybody? Okay. We we start the the the discussion on the financial performance with the results of first semester versus the similar period in 2024. The net sales, the consolidated net sales are reaching to 552,000,000 lay with an increase of 29% compared to h one twenty four. In terms of the the the main reasons for the the increase in sales and also the increase in in expenses is the at

Company Executive/Moderator, Theraplas Group: first

Bogdan, CFO, Theraplas Group: the

Company Executive/Moderator, Theraplas Group: ’20 And are quarter the

Bogdan, CFO, Theraplas Group: results results results of of Freilor the Group versus ’24, where we consolidated only in quarter two. We also consolidate two quarters of the results of OptiPlast, OptiPlast, which was acquired in November 24. So in H1 twenty four, we didn’t had any contributions from OptiPlast. And also in h one twenty five, we are consolidating two months of the results of newly acquired Aquatica Experience group. So all the expenses, as you can see in the in the table presented, all the expenses are increasing significantly.

But we can see the operating cost is only increasing with 27% versus previous year and versus the increase of 30% in the operating income. This is generating a strong positive EBITDA of almost million versus million in the same period of 24,000,000, meaning an increase of 74%. In terms of EBITDA margin, we we present an increase by 2.2% compared to h one twenty four. The net result is a positive and strong one. We have 3,400,000 lay versus a loss of 6,600,000.0 in 2024.

Now we are presenting the financial performance in the first semester versus the budget. As you can see, we are way above the the budget for for this period. We have the 552,000,000 versus a budgeted turnover of $488,000,000, meaning an increase of 13%. In terms of EBITDA, we also have a positive evolution. We present this €47,000,000 versus €42,000,000 budgeted for this period, generating an increase of 12%.

The net result is a profit of 3,400,000.0, but we need to detail this. We had an in this first semester of 2025, we had a significant impact from the financial result. Here, we have two components. One, the normal interest expense, which is in line with the last year, But we also had an impact from ForEx from the depreciation of the national currency versus euro, which generated a loss of 4,300,000.0. With all this impact, we are still presenting a profit of 3,400,000.0 for this first semester.

In terms of financial performance on segments, we can see that installation and recycling segment is contributing decisively in the increase in turnover and also in the profitability, $4.00 2,000,000 lay turnover versus $3.00 7,000,000 in the same period of ’24. This is generating an operational result, an operational profit of 25,000,000 versus only 12,000,000 in ’24 and an EBITDA of 23,000,000 lay versus 27,000,000 in 2024. As I said, this is a strong evolution, an increase of 56% versus the the similar period in in ’24. Also, in terms of EBITDA margin, we are increasing from 8.9% to 10.6%. This evolution is generating mainly by the consolidation of Volcan Freiler Group, the consolidation of Aquatica Experience Group, and the normal evolution in in the sales production and sales of installation segment.

For compounds, we present an an increase, but it’s a it’s a a relative small increase of only 4% compared to last year in terms of turnover and 244% increase in EBITDA. This is basically showing a stabilized segment with a with a strong with a strong increase and a strong financial position. In terms of windows segment, the the activity was mainly impacted by the reassessment of projects, which generated a delay in collection of receivables and also a delay in launching new products. This affected the financial performance in the first semester. With all this evolution, we are still presenting an increase in terms of turnover of 6%, and we are still presenting a small but positive EBITDA.

This, again, is is showing a stable segment in terms of sales and in terms of profitability. For flexible packaging, due to the consolidation mainly due to the consolidation of Optiplast Croatia, we present an increase of 51% of the turnover up to 75,000,000 lay versus almost 50,000,000 in 2024. The EBITDA, it’s an improved one. It’s still in the negative area, 1,500,000 loss, negative EBITDA versus 6,000,000 negative EBITDA in the same period of 2024. This this is due to the optimization of the the the expenses, mainly the the the expenses.

Moving forward to the balance sheet, I will I will approach the the significant variation in in the balance sheet accounts. As you can see, we have a significant increase in the working capital. This is mainly due to the increase in sales. So we have in order to support the increase in sales, we have higher inventory levels up to $244,000,000 lay, increase in receivables up to $293,000,000, which is partially compensated by the increase in the trade payables. The net working capital is basically increasing from $227,000,000 to 294,000,000.

Comparing to the sales, it’s an increase of 4% from 25% up to 29%. Obviously, this increase in in the working capital together with the CapEx payments, with the CapEx investments General had to be financed, so we are presenting an increase in bank loans up to the level of $383,000,000 play. In terms of in terms of average leverage ratio, although in this moment, we are at 5.2, the methodology of computation is taking into account the EBITDA for the second semester in ’24 and the first semester in ’25. It is presenting a a decrease from 5.6 up to 5.2. But taking into account the budget and our expectations for the second semester of twenty five, we are expecting a leverage level below four for the entire year 2025.

Moving forward to the cash flow, this is synchronized with what I have presented earlier in the balance sheet. We can see that we are using the cash flow for the working capital, the impact being 90,000,000 lay, The the main component being the net impact of working capital of 73,000,000, which, together with the payments for the fixed assets acquisition, had to be financed, and we are presenting drawings from loans, bank loans of 75,000,000 in line with what we have drawn in 2024. As I mentioned, a significant impact is coming from the cash outflow of 33,000,000 lay for the acquisition of capital expenditure investments. This was the cash outflow for the first semester of ’25. For the entire year of 2025, we have budgeted CapEx of 65,000,000 late.

Another impact that we are expecting in the second semester is the collection of a subsidy of 6,500,000.0 for for the photovoltaic power plant. This, these are the this is the financial performance, so I hand over to, my colleague for the question sections.

Company Executive/Moderator, Theraplas Group: Thank you very much. Since we don’t have any questions prior to the conference call, I suggest that we go into questions now. Feel free to use the chat or just raise your hand and ask any questions you you want. Come on. We’re getting off the hook.

That is it. No questions. Okay. In this case, thank you very much. We are in touch via our IR channels, and we’ll meet back in three months time for the third quarter results.

Thank you very much. Have a nice, afternoon, and, be in touch. Bye bye.

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