Fabrity Holding Group (GPW: FAB) Summarizes the Three Quarters of 2024

The Fabrity Technological Group (GPW: FAB) maintains double-digit growth dynamics of the business scale, with net profit boosted by recording the CIT overpayment.

In the period of three quarters of 2024, the Fabrity Holding Group achieved sales revenues of 56.1 million PLN, indicating a 14% year-on-year increase (+6.8 million PLN). The Group also generated 6.4 million PLN EBITDA (+0.2 million PLN YoY) and 5.1 million PLN operating profit (+0.6 million PLN YoY).

“The results of the Fabrity Group for the three quarters of 2024 are the first signals showing that we can effectively implement the assumptions of the 2024-2026 Strategy and confirm the correctness of the development directions adopted therein. We increase revenues and operating result, our actions are focused on increasing the value delivered to customers. We accomplish this by improving the offer and developing competencies, also based on new partnerships. On our scale, we already have the ability to diversify business between different industries and markets, expanding the range of available activities in response to market changes. We are convinced that maintaining the dynamics of organic growth is within our reach, complemented by development through acquisitions, mainly in terms of acquiring or strengthening specific specializations and increasing revenues from selected markets,” comments Tomasz Burczyński, President of the Management Board of Fabrity Holding S.A.

In the period from January to September 2024, Fabrity Holding Group also recorded a net profit of 7.9 million PLN. The company’s result was negatively affected by PerfectBot’s result, which is consolidated using the equity method (-0.8 million PLN), while the positive impact came from the recording in June of nearly 1.8 million PLN CIT tax refund for 2023, and the recognition of 2.5 million PLN overpayment tax for 2022 (RB 45/2024, 55/2024, 63/2024).

“In previous years, the divestments of companies outside our core business (cloud, marketing) significantly supported our net profit and allowed for the payment of solid dividends. We remain consistent in this respect, and just in November we paid PLN 1.3 per share as an advance on the dividend for 2024. This year, a positive event affecting the level of net profit is the inclusion of CIT overpayment related to the use of the holding relief in transactions for the sale of subsidiaries. Our ambition is to continue to be a company not only with growth potential but also of dividend nature, especially as we practically have no debt and our business is not capital-intensive,” points out Artur Piątek, Vice President of the Management Board of Fabrity Holding S.A.

Looking at upcoming periods, the Fabrity Group sees room for development both in its current competency spectrum and in new areas.

“As far as service development is concerned, in Fabrity we focus primarily on the areas of Industry 5.0, Generative AI, and Machine Learning. We expect a significant increase in revenues in this area in the coming years. A new focus area where we are increasing our competencies is Cloud Data Platform, which covers many domains related to a strategic approach to data in organizations, including in the field of artificial intelligence. Here, we focus primarily on a new partnership with Snowflake. In the field of e-commerce services and solutions, we have expanded our partnership with Hyva and entered into a partnership with PIM Core, a provider of Product Inventory Management solutions,” says Rafał Graboś, Vice President of the Management Board of Fabrity Holding S.A.

Looking at past quarters, it should be noted that the operational efficiency of the Fabrity Group was positively affected by the lack of so-called “bench” costs, i.e., IT specialists without allocation in projects carried out for clients. On the side of general costs, Fabrity underwent a transformation involving tuning down the level of costs to the smaller scale of operations after the sale of marketing segment companies in September 2022.

In the third quarter of this year, Fabrity systematically reduced revenues from the ending framework agreements with Frontex, while systematically increasing revenues from the remaining base of regular customers, effectively renewing other framework contracts, and acquiring new customers. Services for the EU agency Frontex increased revenues sharply from the second quarter of 2023 and enlarged the comparative base for the current period. Fabrity counts on the continuation of cooperation with Frontex next year, considering tender decisions for new frame contracts. Revenues in the third quarter were additionally affected negatively, as in previous months, by the lower EUR/PLN exchange rate (the euro is Fabrity’s second most important currency after the zloty).

Despite a change in the revenue structure in the Software segment and one-off costs related to the merger process of Fabrity sp. z o.o. and Fabrity Holding S.A., the operating result and individual profitability levels remained stable.

“This is even more positive news considering that in the previous quarter and also in earlier periods, production profitability noticeably grew and was maintained even during the vacation period,” comments Tomasz Burczyński, President of the Fabrity Holding S.A. Management Board.

In Q3 2024, Fabrity secured further significant contracts and acquired contracts with new companies. Among the existing clients, the extension of cooperation with the City of Warsaw and the potential possibility of carrying out additional orders was most important. Among the new clients, a large tire manufacturer, a leading brand in this market, should be mentioned, with whom cooperation has long-term and developmental potential. Fabrity also signed a three-year framework agreement with the National Centre for Research and Development (NCBiR). In the field of e-commerce services and solutions, several promising clients have been acquired, including two car parts distribution companies, one of which is from the USA.