24 Apr, 2023
ELKO Group Annual Report, 2022
Despite a decrease in consolidated revenue by 30.8%, caused by the divestment of Russian operations, the profitability remained strong throughout the year.
Highlights of the Akciju Sabiedrība ELKO Grupa audited consolidated Annual Report 2022:
- Revenue USD 1,516 million (EUR 1,427 million), a decrease of 30.8% year-on-year
- Gross profitability 9.4%, an increase compared to 7.2% in 2021
- Gross profit USD 142.7 million (EUR 134.3 million), down by 10.1% year-on-year
- Net profit USD 40.4 million (EUR 38 million), a decrease of 9.1% year-on-year
The year 2022 started with the first signs of market balancing as the demand began slightly softening while supply recovered in some product categories. However, the geopolitics added unexpected turbulence and significantly affected the mindset and behaviour of all the market participants (vendors, distributors, customers and governments) in ELKO's primary markets.
Since the beginning of the war in Ukraine in late February, ELKO stopped supplying goods to the Russian market following the implementation of international sanctions. To mitigate risks related to operations in Russia, at the end of April, the company divested its operations in the region. Thus, the results of operations in the Russian market were consolidated into the ELKO Group only for the first four months of 2022.
While there were no sales during March in Ukraine, there was a noticeable recovery in the remaining year, allowing the Ukrainian sales office to resume operations fully and finish the year profitably, navigating between strict risk management policies to limit Group’s exposure to the volatile region and new opportunities in highly demanded product categories.
Operations in other European geographies saw incremental demand in specific product categories, like drones and energy management, at the same time feeling strong inflationary pressure on consumer sentiment closer to the year's end. Some of those effects were planned, allowing us to achieve results above initial estimates. At the same time, selected markets showed signs of slowing down if compared to the heights of pandemic-driven demand.
Despite a decrease in consolidated revenue by 30.8%, the profitability remained strong throughout the year. Prudent risk management and divestment of Russian entities have noticeably improved the balance structure.
Audited consolidated and stand-alone annual reports are attached.