Hungary's Duna House kicks off 2024 with robust results

Major growth of core profits

Duna House's quarterly revenue for the first quarter amounted to HUF 8.9 billion, down 5% year-on-year.

• Italy saw a market turnaround on the back of falling benchmark interest rates, with the mortgage market expanding at an annualised 2%, with total volumes of loans brokered by the Group up 6%. As a result, the revenue erosion of the Italian operation stopped, with revenues up 2% yr/yr at HUF 4.2 billion. Clean core EBITDA from the country amounted to HUF 454 million.
• In Hungary, the company's revenue plunged by 65.2% to HUF 1.4 billion. A major factor in this was the fact that the Forest Hill residential project deliveries cause significant fluctuations in the consolidated financial statements. Forest Hill sales within the property development business contributed HUF 270 million in revenue and HUF 36 million in EBITDA to the Group's results, compared to an outstanding HUF 3,360 million in revenue and HUF 481 million in EBITDA in Q1 2023.
• Revenues of the Polish operation tripled in annual terms to HUF 3.2 billion. The negative impact of the phasing out of subsidised lending programmes on borrower demand and disbursements was below the scenarios forecasted by management.
• The Czech subsidiaries closed the first quarter with HUF 69 million revenue.

DH's ebitda reached 992 million in january-march, up 19% year on year.

This primarily had to do with the fact that the nearly HUF 300 million EBITDA decline in Hungary (to HUF 317 mn from HUF 618 mn) was almost completely offset by the Polish EBITDA growth to HUF 229.2 million from HUF -85.8 mn in Q1 2023. Also, EBITDA in Italy jumped by 47% to nearly HUF 444 million.

For transparency purposes, DH discloses from the second quarter of 2019 "cleaned core" adjusted results categories, in which, in addition to the results of the MyCity property development business, it further adjusts for items deemed by management to be either unique or material to the Group's ongoing profit generation. The Group's cleaned core EBITDA reached HUF 965.7 million in the first quarter,

a growth of 141% over the base period.

the group's adjusted core after-tax profit amounted to huf 528 million, up 54% yr/yr.

Total comprehensive income attributable to the shareholders of the company amounted to HUF 836 million, a growth of 294% over the base period.

Segments

• Financial Intermediation revenue increased 49% yr/yr to HUF 7.6 bn, the segment's EBITDA leaped 128% yr/yr to HUF 815 mn, with EBITDA-margin improving to 11% in the quarter.
• Despite growth in Hungary and Poland, revenue in the Group's real estate franchise segment increased by only 3% due to the closure of the real estate brokerage operations in Italy. EBITDA jumped to HUF 85.9 million (+328%).
• With network commission revenue of HUF 498 million (+32%), the own office segment's revenue increased by 26% yr/yr, with HUF 162 mn gross profit (+25%), and its EBITDA amounted to HUF 27 million, against HUF -25 mn in the base period.
• Real estate investment segment revenues amounted to HUF 290 million with continued Forest Hill sales. The decline was due to a spike in handover volumes in the base period.

Guidance

In its outlook, DH's management underlined that the plans used to prepare their forecast has been exceeded by the Group in the first quarter of 2024 and a positive scenario is reinforced by the following factors:

• In Italy, having a 6% loan volume growth in Q1, mortgage loan applications filed by the Group were up by 33% in the first quarter, foreshadowing a further jump in disbursed volumes for the second quarter.
• In Poland, the negative impact of the phasing out of subsidised lending programmes on borrower demand and disbursements was below the scenarios forecasted by management.
• The Hungarian property and credit market started the year stronger than management's expectations and the outlook remains positive.

Overall, Duna House's latest figures were also above the company's own expectations, and the market environment seems to be more favourable than previously forecasted by management.

Duna House shares are up 0.3% on the Budapest Stock Exchange today and gained 17.1% this year.

Cover photo: Duna House