Mennica Skarbowa, Poland’s largest dealer of investment gold and other precious metals, closed 2023 with revenues 42% lower than in 2022. This result is consistent with the decline in gold demand recorded in this part of Europe (a decrease of 42% y/y). This outcome is the result of banks raising average interest rates on deposits, favorable savings products and year-round high inflation. The high cost of living for Poles and Europeans meant a decrease in the amount of spare funds allocated to bullion purchases, while record high gold prices encouraged primarily to resell accumulated bars and coins. In the opinion of the Company’s Management Board, given the macroeconomic situation in Poland, there is a chance for a long-term recovery in the gold sales market and a return to pre-pandemic Covid-19 sales levels.

The World Gold Council’s analysis indicates that in 2023 global demand for gold bars and bullion coins fell by 3% year-on-year and amounted to 1190 tons. During this time, demand in this sector remained remarkably steady, which can be partly explained by the balancing of eastern and western investment trends. The year 2023 was no exception: European investment demand fell sharply, while key markets in Asia recorded growth. In Europe, the situation in the physical investment gold market was at its worst. Demand fell y/y by as much as 59% – dropping to 127 tons, the lowest level in 16 years. Reasons for the decline were similar throughout the year: higher interest rates, the attractiveness of savings offerings, and investors’ heavier mortgage repayment burden. Europe’s largest market, Germany, recorded a decline to an annual level of just 47 tons (or as much as a 75% y/y drop), a result of the downturn in sentiment due to the country’s economic situation and continued pressure on household finances, particularly due to rising energy costs. Among markets classified by the World Gold Council as “other Europe” (which also includes Poland), there was a total bullion demand of 24.2t (an average decline of 42% y/y). This is the weakest annual performance since 2019. The decline in demand translated into sales generated by Mennica Skarbowa. The Company’s revenue in 2023 was 42% lower than in 2022, which corresponds to the decline in gold demand recorded in this part of Europe.

– The Company’s financial and asset situation, despite the loss made in the current year and the decline in revenues, is stable. The Company has a high level of equity and working capital to continue its operations. Being aware of the downturn in the European market, last year we devoted a lot of time and resources to strengthening the Company. We opened a branch in Szczecin, launched a new online store, began selling gold and silver on various platforms including Empik and Allegro, and expanded the range of goods offered through Mennica Skarbowa’s online stores and stationary branches. We have also invested in marketing campaigns supported by our ambassador, the well-known soccer referee Szymon Marciniak. Mennica Skarbowa’s projected financial position in 2024 is positive. We are currently observing an upturn in the gold sales market – which suggests a possible return to sales levels prior to the Covid-19 pandemic. In the first quarter, we are already observing not only an increase in the price of gold, but also in sales of our bullion products, which should ultimately translate into improved margins – comments Adam Stroniawski, Proxy, Managing Director of Sales at Mennica Skarbowa.

Mennica Skarbowa’s gross margin on sales of goods and materials amounted to PLN 20.5 million in 2023 and decreased compared to 2022, the percentage margin was 2.91% in 2023 and 4.41% in 2022, respectively.  The lower gross margin on sales of goods and materials was a result of higher purchase prices of goods and the aggressive pricing policy of competitors, which affected lower selling prices. In addition, in order to maintain its position as the market leader in the sale of investment gold, the Company incurred high marketing and promotional costs in 2023, as well as measures to expand and make both stationary and online sales channels more attractive. Sales outlets in Warsaw, Krakow and Katowice were revitalized, and a new e-commerce site was launched. High costs, with a weak market potential last year, translated into a net loss of PLN 8.7 million in 2023. Nevertheless, in the opinion of the Company’s Management Board, the above costs were necessary to maintain the Company’s position in the market and will bring economic benefits in the near term.