Report of the Board of Directors on the Activities of the Company in 2022
In 2022, Ahrend a.s. pursued its activities fully in accordance with its subject of business declared in the Commercial Register.
In comparison with previous years, the European and global economies were, in 2022, subject to a reduced negative impact from the Covid-19 pandemic. The increasing pressure from employers for employees to return to the office, or finding an optimal balance between working from home and from the office, has somewhat revived the branch of business that the Company is active in. For the Company, this trend is reflected in increased business activity and a growth in orders from customers.
A major external influence that impacted the Company in 2022, and the global economy in general, was Russia’s military invasion of Ukraine. In response to the Russian breach of international law and aggression against Ukraine, the international community imposed wide-ranging sanctions and restrictions on business relations. Among other negative impacts for the global economy, this resulted in increased volatility on financial and commodity markets. Specific impacts for the Company included negative currency exchange fluctuations in relation to the Czech Crown and a significant increase in energy costs.
In this year too, there was significant inflationary pressure on the price of input materials, services as well as energy. The global supply chain was influenced by the fading echoes of the Covid-19 pandemic, and then by the invasion that Russia launched into Ukraine. These factors had an impact on slowing commercial exchanges between Asia and Europe, instability in the price of input materials, and extreme energy price inflation. Finally, these inflationary pressures in the economy resulted, at the end of 2021, in an increase in the base rate interest in the Czech Republic. This had a knock-on effect of strengthening the Czech crown significantly against major currencies at the end of 2021, start of 2022. This was a major factor in the Company’s financial result for 2022.
The net sales of the Company rose by 10.2% from CZK 1 409 million in 2021 to CZK 1 553 million in 2022. Although the Company managed year-on-year to reduce or maintain at the same level the main categories of operating costs (in particular, services and personnel costs), and the margin on the sale of goods in 2022 was maintained at a good level, the operating profit was impacted by accounting operations, and in particular the creation of provisions and a write-off of receivables due from the subsidiary in Russia caused by the decision to pull-out of Russia following its invasion of Ukraine. Despite this, the Company managed to reduce its operating loss from CZK -25 million in 2021 to CZK -17 million in 2022.
Ahrend a.s. achieved a loss in 2022 (excl. Received dividends) of CZK -39 million, which represents a year-on-year decline of CZK 1 million. An exchange-rate loss of CZK -18.6 million (in 2021 this was CZK 13.1 million) contributed significantly to the overall loss of the company.
The largest portion of revenue in 2022 was generated from projects for Key Accounts, both in the local market and abroad. The largest customers were the ERSTE group (Česká spořitelna), Volkswagen Group, Grand Vision and ŠKODA AUTO.
The financial result of the company after tax for 2022 was CZK -32 million, of which CZK 7 million represents dividends received from subsidiaries.
In 2022, investment into tangible and intangible fixed assets stood at almost CZK 85 million, whilst investment in 2021 stood at CZK 35 million. A significant portion (CZK 60 million) comprises advance payments for machinery as part of the WoodHub project, which commenced its construction phase in 2021. The completed and fully operational WoodHub is planned for the second half of 2023. This project represents the largest investment in the Company’s history. The aims of the project include increasing product quality, flexibility and production productivity, and creating sufficient capacity for the entire Royal Ahrend group. The project represents an important milestone in the full integration of production operations in the Czech Republic into the Royal Ahrend group supply chain. The company also expects to achieve synergies that will lead to significant savings across the group. The Company will continue to work on achieving synergies in the coming years.
The company has an environmental management system certified in accordance with ČSN EN ISO 14001:2016, a quality management system compliant with ČSN EN ISO 9001:2016 and also a health and safety at work system in accordance with the requirements of ČSN ISO 45001:2018. The supervisory audits in 2022 confirmed their correct application.