Mennica Skarbowa, Poland’s largest dealer of investment gold and other precious metals, has generated revenue of PLN 280.4 million in the third quarter of 2022. Thus, the Company exceeded the level of sales obtained in the same period of 2021, which amounted to PLN 224.5 million. At the same time, the level of revenue increased from PLN 651 million in 2021 to PLN 879 million in 2022 over the three quarters of this year. Cumulatively, net profit for the first three quarters of 2022 amounted to PLN 24.4 million, which represents a 60.5% increase over the PLN 15.2 million net profit generated in the same period of 2021. The company continues to see increased demand for investment gold among Poles, especially in lower weights. Poland is expected to break last year’s record of 14 tons of sales of this bullion nationwide.
Mennica Skarbowa has already sold 3.5 tons of gold this year, an increase of almost 30% compared to last year. Customers were most eager to buy Krugerrand coins (up 15% compared to last year) and also small bars of 1, 5, 10 grams and 100 grams (up 20% here). In particular, since the outbreak of the war in Ukraine, smaller gram products are very popular, considering such investment gold can be most easily sold around the world, but also exchanged for other goods if needed.
A significant factor that contributed to the high sales performance was the wide range of products available off-the-shelf. The high direct availability of goods at sixteen branches of the Company is an important competitive advantage, since customers prefer this form of sales. The increase in sales volume resulted in the implementation of a high-stocking policy, among others, in order to smoothly execute the sale of goods on hand, which consequently increased the Company’s current assets. The stock of goods at the end of the third quarter of 2022 amounted to PLN 71.3 million, an increase of 127% compared to the third quarter of 2021. The high stock of goods was a result of two factors. Part of the goods were customers’ orders that were received in October 2022, which was after the end of the quarter. The other part was goods accumulated for sales in the following quarter. For in order to meet the huge demand that still prevails in the gold market, it is necessary to stockpile the commodity for smooth sales.
The third quarter is the holiday season, and historically every year during this period we record lower sales. This time, however, we significantly exceeded last year’s revenue level. This is certainly a result of increasing popularity for investment gold in Poland. However, this was primarily influenced by high inflation and the continuing war in Ukraine. During such moments, the more gold is regarded as a safe haven for our cash, especially at a time when it is difficult to find other long-term investment targets. One can only lose on bank deposits, and it is also increasingly difficult to buy an apartment or a building plot. The entry threshold is also different. Several thousand zlotys can already be invested in gold, an asset that is very easily traded around the world. Demand for gold is at a very high level and there are days when we see queues in our branches. Inflation is expected to be even higher, countries are printing huge amounts of money to help economies face high gas or oil prices. Under such circumstances, sales of investment gold will increase. I am confident that nationwide we will break last year’s record for sales of this bullion, which amounted, as we estimate, to 14 tons – comments Jarosław Żołędowski, President of the management board of Mennica Skarbowa.
In the third quarter of 2022 alone, the Company sold 1.1 tons of gold, compared to 920 kg in the third quarter of last year. Despite a 25% increase in revenue, profit on sales in the third quarter of 2022 was lower than in the same quarter of 2021, at PLN 5.2 million compared to PLN 8.2 million in the third quarter of 2021.
The decrease in sales profit was mainly due to a decline in gross sales margin due to a temporary decline in the price of physical gold in the Polish market and the Company’s management board’s decision to liquidate slower-moving inventory during the third quarter of 2022. We intend to focus on selling higher-margin products in future quarters – comments Adam Stroniawski, Sales Managing Director.
Cumulatively, profit on sales for the first three quarters of 2022 amounted to PLN 30.6 million, which represents a 50.2% increase over the PLN 20.1 million profit on sales after the three quarters of 2021.
Gross profit in the third quarter of 2022 was PLN 4.8 million, compared to PLN 7.9 million in the third quarter of 2021. The net profit, on the other hand, was PLN 3.9 million, compared to PLN 6.0 million in the third quarter of 2021. However, net profit for the first three quarters of 2022 cumulatively amounted to PLN 24.4 million, an increase of 60.5% over the PLN 15.2 million net profit after the three quarters of 2021.
The balance of short-term financial assets, including cash, increased from PLN 19.1 million recorded at the end of the third quarter of 2021 to PLN 28.0 million at the end of the third quarter of 2022. The surplus of current assets over current liabilities positively influences the Issuer’s financial security, which, combined with the recurrence of results, testifies to the Company’s stable financial position and ensures the possibility of strategic planning for business development in the next settlement periods.
The sales network of Mennica Skarbowa already includes 16 locations in Poland. Expanding the stationary sales network is one of the strategic aims of the Company, which in this way plans to further strengthen its position in the gold sales market.