The EMEIA division saw a fractional decrease of revenue. Due to customer inventory destocking and lower market demand in markets Building & Construction and Coatings, Sealants & Adhesives, volumes were down. This effect was largely compensated by sales price increases. Revenue growth in Asia in functional currency was mainly the result of increased sales prices. The revenue of division Americas in functional currency increased due to higher volumes in Q1 and higher sales prices.
The direct contribution margin for the Group was EUR 26.8 million, an increase of EUR 0.8 million compared to the same period last year. The margin as a percentage of revenue ended at 43%, versus 48% in the previous year. The drop is largely explained by an increased difficulty to pass on continued and sharply rising raw material prices, timely and in full to our end markets. The net revaluation of inventories (EUR 0.5 million) favorably impacted the margin with 1% point.
Operating expenses were EUR 21.5 million, up by EUR 3.4 million (19%) from the previous year, primarily due to higher labor-, energy-, consulting-, travel costs and unfavorable exchange rate differences. The increase is to a large extent related to the Groups' ongoing program of process optimizations and IT upgrades.
The operating result was EUR 5.3 million, versus EUR 7.9 million for the previous year. The net result was EUR 4.1 million (EUR 4.75 per share) versus EUR 6.1 million in the previous year (EUR 6.99 per share).
Net cash flow was negative at EUR 4.9 million versus a negative cashflow of EUR 1.9 million last year. The negative net cash flow was a result of unfavorable development in the cash flow from operating activities and from financing activities. These were partially compensated by translation differences in Cash and Cash Equivalents.
The lower cash flow from operating activities is mainly explained by an increase in working capital. The higher working capital is a result of higher inventory because of higher raw material prices and higher stock positions to avoid supply disruptions. The lower cash flow from financing activities is caused by expenditures in fixed assets, such as new machines.
The situation in Ukraine and the current global economic climate contribute to a high level of uncertainty related to market developments. In line with previous years, Holland Colours refrains from making forward-looking statements.
Apeldoorn, October 21st, 2022
Coen Vinke
Eelco van Hamersveld
Geert Rutgers