Property 29 November 2024, 3:50pm

Hungary Duna House brass upbeat on annual guidance in view of Q3 results

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Hungary's real estate brokerage Duna House's key results improved significantly in the third quarter of 2024, with revenue up 38%, EBITDA up 89%, and core adjusted EBITDA up 38% in annual terms. DH's after-tax profit also took off, with the report's blemish being a drop in core adjusted after-tax profit due to a decline in interest income. Management expects a strong fourth quarter, so they forecast their targets for this year to be in the top half of the guidance range.

Key numbers

Duna House has published its Q3 2024 quarterly figures on Friday, with a consolidated revenue of HUF 9.9 billion,

which corresponds to a 38% year-on-year increase.

For transparency purposes, the Group has been disclosing 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.

Revenue from Italian operations increased by 26% year-on-year in the third quarter of 2024. Quarterly EBITDA jumped 120% to HUF 671 million. In Italy, Credipass is growing at an accelerating pace, with the total volume of loans brokered by the Group increasing by 35% year-on-year, resulting in a quarterly clean core EBITDA of HUF 718 million.
In Hungary, the Forest Hill project deliveries cause significant fluctuations in the consolidated statements. The real estate development activity generated total revenues of HUF 1,064 million and quarterly EBITDA of HUF 400 million in Q3 2024, resulting in Hungarian EBITDA of HUF 604 million and core EBITDA of HUF 204 million (-23% y/y) (see next page). The recovery of the credit and real estate markets continued in spite of the summer easing, core activities generating clean EBITDA of HUF 254 million. The Hungarian activity bears the costs of central management and stock market listing.
The revenue of DH's Polish subsidiaries' jumped 32% compared to Q3 2023, with EBITDA of HUF 76 million. The credit and real estate markets have stabilised after a decline following the phasing out of subsidised lending programmes, with Polish clean core EBITDA contribution of HUF 76 million.
The Czech subsidiaries closed the quarter with revenues of HUF 41 million and an EBITDA loss of HUF 9 million.

revenue for the quarter was HUF 9.9 billion (+38% yr/yr).

Quarterly clean core EBITDA closed at HUF 1,039 million, 38% above the Q3 2023 level.

With a strong increase in Group EBITDA and almost unchanged depreciation and amortisation items and net financial results, after-tax profit amounted to HUF 670 million, jumping 162% year-on-year.

Clean core profit after tax in Q3 2024 amounted to HUF 501 million, -4% yr/yr due to a decline in interest income.

Total comprehensive income attributable to the shareholders of the company amounted to HUF 839 million, up 153.3% in annual terms.

Segments

Revenue of the financial segment was 36% higher than in the third quarter of 2023, and its gross margin closed at a stable 26%, with gross profit of HUF 2.1 billion. Segment EBITDA jumped to HUF 958 million (+74% y/y). EBITDA margin rose 3ppts to 12%.
Net sales revenue of the rea estate franchise segment dropped 6% due to the discontinuation of this activity in Italy, despite a 33% commission revenue growth in the Hungarian operation. EBITDA in the franchise segment fell to HUF 13 million due to a one-off GDPR fine of HUF 50 million and increased marketing spend. The Group has appealed the fine, in particular its magnitude.
The own office segment achieved gross profit of HUF 149 million (-9% yr/yr) in Q3 2024 on total network commission revenue of HUF 391 million (-15% yr/yr). EBITDA turned into a loss of HUF 17 mn.
Real estate investment segment generated revenues of HUF 1.08 billion with continued Forest Hill sales.
Complementary segment revenues amounted to HUF 89 million, EBITDA closed with a loss of HUF 20 million due to the retention and expansion of Impact Fund Management, the launch of DH Energy and minor losses in Primse Polish proptech. These three activities generated a combined loss of HUF 45 million during the quarter.

Management guidance

The Group's performance in the first three quarters was in line with management's forecast and the Board expects a strong final quarter, putting the annual result in the upper half of management’s following forecast for 2024:

Clean core EBITDA: HUF 3,865 – 4,550 million
Clean core after-tax profit: HUF 1,770 – 2,340 million

Duna House's share price rose 55.6% this year.