Ergis
09 2012, 07:33

Ergis GROUP after 2011: boost in sales, operating profit and EBITDA

ERGIS GROUP AFTER 2011: BOOST IN SALES, OPERATING PROFIT AND EBITDA

In 2011, the ERGIS Group, a leader in plastics processing in the Central and Eastern Europe, recorded an increase in sales at a level of PLN 621.4 million, that is 4% more than a year before. It is another quarter when the Group’s sales revenue has been increasing (cumulatively) as compared to the previous period. The operating profit in the fourth quarter alone reached PLN 2.6 million (with a loss in Q4 2010), and after 12 months it amounted to PLN 16.2 million, representing a 34% increase over the previous year.

FINANCIAL RESULTS - DETAILS

Financial results of the ERGIS Group after four quarters of 2011 are presented in the table below:


PLN '000

4Q2010

4Q2011

Change

1-4Q 2010

1-4Q 2011

Change

Revenue

148,824

147,019

-1%

597,254

621,39

+4%

Operating profit

-3,750

2,551

+168%

12,070

16,194

+34%

EBITDA

1,386

7,565

+446%

32,482

36,076

+11%

Unrealised exchange rate differences

268

600

+124%

2,983

-3,786

-227%

Net profit

-3,770

-1,770

+53%

7,503

29

-100%


In 2011, the prices of raw materials continued to grow; however, November and December saw temporary price falls. In Q4 2011, the Groups revenue stood close to those realised in the same period of 2010, with the EUR mid-exchange rate higher by approx. 11%. Cumulatively, the sales exceeded the levels of 2010 by 4% with the EUR mid-exchange rate higher by approx. 3%.

What is worth noting is high dynamics of sales of the PET tapes (increase by 29.2%), laminates (increase by 21.3%), stretch films (increase by 14.9%), and other packaging films (increase by 14.6%). In the case of soft PVC film, revenue growth is partly a result of an increased sales volume (more than 3%) and partly by higher manufacturing prices. In the case of other product groups, the higher value of sales revenue is the effect of selling prices higher in the previous year, resulting from increased basic raw materials prices.

Consistently pursued reduction of manufacturing costs and an increase in the EUR exchange rate have had a positive effect on the level of realised margins and the operating profit. In the fourth quarter of 2011, the Group achieved operating profit of PLN 2.6 million (with a loss a year before). As a result, in cumulative terms, the operating profit for the whole 2011 amounted to PLN 16.2 million, i.e. it was by 34% higher than in 2010.

The Increase in the operating profit was followed by the Group’s EBITDA which in Q4 2011 increased to PLN 7.6 million (increase by 446%), and cumulatively to PLN 36.1 million (increase by 11%).

The gross profit and net profit in the fourth quarter of 2011 and for the entire 2011 were affected by high financial expenses. They included unrealised foreign exchange losses associated with an increase in the EUR exchange rate (primarily due to a changed value of a EUR-denominated loan incurred by the Company for a purchase of the German companies). The cost incurred for that reason in 2011 was PLN 3.8 million, while in 2010, foreign exchange gains (income) of PLN 2.3 million were recorded. Financial expenses affecting the net result in the fourth quarter of 2011 included also accounting loss incurred on the sale of shares in one of the Group’s subsidiaries.

ERGIS GROUP’S INVESTMENTS

The Group’s investments performed currently include the fourth line for manufacturing of a multilayer stretch PE film. The line will be installed in Oława and its start-up is scheduled for the turn of Q1 and Q2 of 2012. The investment’s outlays are expected to amount to PLN 24 million, of which PLN 12 million is to be incurred in 2012. The investment will be financed from the EU funds, under the Innovative Economy programme (approx. 40% of the expected outlays, i.e. PLN 9.6 million), and from a bank loan (the remainder). The line will improve the stretch film manufacturing capacities by 25%, comparing to those achieved in 2011.

The Group is also in the course of relocating one of the PET film manufacturing lines from a subsidiary's plant (MKF-Folien GmbH) in Berlin, to the plant in Wąbrzeźno. The value of the investment is estimated at approx. PLN 4 million (cost of relocation and infrastructure). The relocation of the line is to be completed in the first quarter of 2012. The relocation of the line is scheduled for completion in the first half of 2012, and it may exert a significant positive influence on the Group’s future results as a consequence of a decrease in production costs.

“From the perspective of operating results, this year’s fourth quarter was a second most successful Q4 in the Group’s history. In addition to good sales, cost control and a relief on the raw materials’ market, also the first effects relocation had an impact on the financial results. We treat it as a good introduction to 2012, when – in addition to the completion of the Oława investment in the new technological line for stretch PE films – we are also planning to launch the PET manufacturing in Wąbrzeźno on the manufacturing line relocated from Berlin,” said Tadeusz Nowicki, the President of the Management Board of ERGIS-EUROFILMS.

For more information, contact:

Małgorzata Kot, ERGIS - EUROFILMS S.A.
Tel. 0604 159 103, 0604 159 159
e-mail: kot@ergis.eu

Magda Kołodziejczyk, M+G
Tel. (22) 625 71 40, 0501 16 88 07
e-mail: magda.kolodziejczyk@mplusg.com.pl




ADDITIONAL INFORMATION

ERGIS Group is Poland’s largest as well as Central and Eastern Europe's leading manufacturer of PVC products: films, compounds, wallpapers, wall panelling, and windowsills. The Company's offer includes films laminated with a layer of another film, paper, woven and non-woven fabric, etc. printed films, insulation films, packaging films (including films for packaging pharmaceuticals), bus floor covering, compounds for cable manufacturing, interior and exterior wall panels, expansion joint tapes, artificial leather, coated fabrics, tablecloths, and vinyl and paper wallpapers. Additionally, the Group is Poland's largest manufacturer of stretch films (tensile films, used e.g. for wrapping loads on pallets, PVC thermoshrink films (used, e.g. for food packaging) and PET and PP tapes (used for fastening medium heavy and heavy products and loads), as well as a distributor of polypropylene BOPP film (used mainly for packaging manufacturing). The Group manufactures also packaging film for food industry (laminates, single layer films, rigid films, flexible films, ‘skin’ films), as well as flexible packaging films and multi-layer laminates.

Additional information is also available at www.ergis-eurofilms.eu