Strojopromet, a market leader in wholesale metal trading, is a serious candidate for the new windfall tax

The family trading company Strojopromet, which deals in the sale of metal products, is one of the main candidates for paying the windfall tax based on last year’s business results. Of course, we must wait until the end of this year for this to be definitively confirmed, as it will all depend on whether this year’s profit is such that it is 20 percent higher than the four-year average.

Strojopromet, owned by the family Kraljić (spouses Nada and Stjepan with sons Žan and Aleksandar), achieved a particularly large jump in revenue and profit last year – revenue amounted to 782 million kuna (in 2020 it was 557.9 million kuna), and last year’s net profit was 107.4 million kuna (in 2020 it was 32.4 million kuna). This is a company with high revenues, as shown in previous years; for example, in 2019, revenue was 587.6 million kuna, and profit was 30.9 million kuna. Looking at these numbers, Strojopromet is a candidate for paying the windfall tax, but as we mentioned, let’s wait because perhaps the high profit from last year will influence avoiding this.

– Given the fact that it has been generating revenues significantly higher than 300 million kuna for years, Strojopromet is in the group of 360 companies that are therefore candidates for paying an additional profit tax for 2022, should it be adopted, according to the currently proposed criteria. The average gross profit that Strojopromet achieved in the four-year period from 2018 to 2021 amounts to 54.4 million kuna, and for 2021 it was 126.7 million kuna. If it achieves a result similar to last year’s in 2022, Strojopromet will have a significant obligation for the calculated additional profit tax – emphasizes financial analyst Nikola Nikšić.

We contacted Žan Kraljić, the company’s director, who politely apologized for not being able to respond, so we could not find out the reason for such a high profit last year. We could not find an explanation in the financial reports either, but the likely reason is the spike in metal product prices, although we must also consider that the purchase price also jumped at the end of 2020. We assume, although we are not sure, that at least part of the reason is the creation of stocks during the announcement of supply chain disruptions.

Nikšić, the owner of the consulting company Konter, analyzed Strojopromet’s business results, asserting that it is a market leader in the wholesale metal and metal ore trading sector. There are 295 companies operating in this sector, and collectively, the available data for 2021 shows that this sector, with 829 employees, generated 3.7 billion kuna in revenue and 263.1 million in net profit. In the period from 2017 to 2021, the sector achieved an average annual revenue growth of 14.5 percent and expenses of 12.7 percent. That it was not only Strojopromet that achieved a jump in revenue and profit is confirmed by Nikšić, who states that last year was very good for metal traders. They achieved a significantly higher growth in business revenue (39.6 percent), which is 7.6 percent higher compared to the growth in business expenses (32 percent).

As a result, metal product traders managed to achieve nearly five times higher net profit in 2021 (263.1 million kuna) compared to 58.9 million kuna in 2020. At the same time, the EBITDA margin of 4.4 percent for 2020 increased to 5.3 percent, or 9.7 percent in the following year. Interestingly, the sector achieved only a quarter of its business revenue from exports in 2021, unlike the previous four years when the share of export value ranged from 28 to 29 percent.

– Strojopromet is predominantly active in the domestic market. In 2021, the share of revenue from exports worth 51.7 million kuna amounted to 7.5 percent, which is 17.1 percent less than the value of the export share of the sector – emphasizes Nikšić.

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