Mennica Skarbowa, Poland’s largest dealer of investment gold and other precious metals, sold 0.9 t of gold in the second quarter of this year. This means that in total, in the first six months of 2022, the company has already sold 2.4 t of bullion, which is 141% of the sales made in H1 2021 (1.7 t). The first six months of 2022 were significantly better in terms of sales revenue, which amounted to PLN 598.5 million compared to PLN 426.5 million recorded in the same period of 2021 (a 40% increase). At the same time, the company generated a net profit of PLN 20.5 million compared to PLN 9.2 million in the first half of 2021, an increase of more than 120%. Mennica Skarbowa management emphasizes that such high sales growth is a great success for the Company, as 2021 was already a very favorable year. Last year, growing demand for gold was driven by the ongoing pandemic and the desire to invest in safe assets. Currently, the geopolitical situation and high inflation are contributing to the increased demand for gold.
The presented results are the outcome of rising margins on gold and high demand for the raw material. The impact of the geopolitical situation on the level of purchases was particularly evident in countries classified by the WGC as other (so-called “other Europe”), which include Poland. Purchases of physical gold in these countries in the second quarter of 2022 amounted to 7.9 million tons, 12% more than in the same quarter of 2021. Undoubtedly, such a situation is due to the ongoing war in Ukraine, but also to the high inflation observed in most countries on all continents. According to the company’s management board, we should expect further growth in demand for gold in the medium term, and Poland will probably once again set a record for gold bullion sales.
– Demand for gold around the world remains strong, although we have seen slight declines. The initial buying fever caused by the war in Ukraine eased gently in the second quarter. Purchases of physical gold in the US retail market fell 4% from the second quarter of 2021 to 28.6 tons, but remain at high levels over the long term. The volume of purchases of gold bars and coins in Europe also declined slightly, but it is worth noting that we are comparing it to exceptionally high levels. As for the performance of the Treasury Mint, it should be noted that our record profit, which we recorded in the first half of this year, is on the one hand the result of rising margins worldwide, and on the other hand, lower costs and higher efficiency of our company. Mennica Skarbowa is growing steadily, increasing its market share and sales network – comments Jarosław Żołędowski, President of the management board of Mennica Skarbowa, adding, – We are number one among the investment gold dealers present on the Polish market. We are proud of our stable financial condition, which can be confirmed, for example, by the recent extension of our credit line by PKO BP SA bank. We earn money on both sales and purchase of gold, which gives us an advantage over other entities and allows us, regardless of the market situation, to systematically implement the chosen development strategy. Our priority now is to adjust our operations to serve the high demand in the best possible way to generate consistently high financial results in future periods.
In the first six months of this year, the Treasury Mint sold 2.4t of gold. The 100g and 1 ounce bars remained the most popular among buyers, as well as bullion coins, especially the Canadian Maple Leaf and Australian Kangaroo. Monthly, the company processed several thousand gold sales, both in its stationary network and online.
Mennica Skarbowa profit from gold sales in the first half of 2022 amounted to PLN 25.5 million, more than half of that in the first half of 2021 (PLN 11.9 million). The increase in sales profit was mainly due to increased sales and rising margins. However, the increase in margins was the result of three factors: increased sales of smaller (high-margin) products, reduced discount policies and a higher gold exchange rate. Mennica Skarbowa experience in the market, business relationships and capital held were important factors that contributed to the high sales performance.
The increase in sales volume resulted in an increase in the company’s current assets. The stock of goods at the end of the second quarter of 2022 amounted to PLN 76.9 million, an increase of 109% compared to the second quarter of 2021. The high balance of goods was the result of two factors. Part of the goods were customer orders that were not received until July 2022, after the end of the quarter. The other part was goods accumulated for sales in the following period. This is because fulfilling the huge demand that still prevails in the gold market requires the accumulation of goods for smooth sales.
At the same time, in the past six months, the company took another step in implementing the development strategy it adopted, aimed at continuously expanding its network of stationary branches. In March, a branch was opened in Bydgoszcz, at 2 Fordonska Street – the sixteenth point of Mennica Skarbowa on the map of our country and, at the same time, the first in the
Kuyavian-Pomeranian Voivodeship. The launch of another branch is aimed at increasing sales and strengthening the position of Mennica Skarbowa as a leader in the investment gold market in Poland.
The level of the Issuer’s current liabilities increased slightly from PLN 96.9 million at the end of the second quarter of 2022 to PLN 103.2 million at the end of the second quarter of 2022. The increase was due to an increase in trade payables resulting from the high number and value of orders, an increase in the value of loans intended to increase the inventory during the period, and a decrease in the level of advance payments received for supplies and services.
The balance of short-term financial assets, including cash, in turn decreased from PLN 14.2 million at the end of the second quarter of 2021 to PLN 10 million at the end of the second quarter of 2022, due to the allocation of financial resources to increase the stock of goods. 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 provides the possibility of strategic planning for business development in the next settlement periods.