Ergis
09 2012, 07:35

The ERGIS Group after Q1 2012: results in line with the assumptions, investments in line with the plan

Warsaw, 15 May 2012

 

THE ERGIS GROUP AFTER Q1 2012: RESULTS IN LINE WITH THE ASSUMPTIONS, INVESTMENTS IN LINE WITH THE PLAN

 

The ERGIS Group, a leader in plastics processing in the Central and Eastern Europe, recorded an increase in sales after Q1 2012, at a level of PLN 156.8 million, i.e. 1.4% more than a year before. Operating profit in Q1 was PLN 3.7 million (up by 2.2%), and the net profit amounted to PLN 3.6 million and was by 90% higher than that achieved in the same period of the previous year.

At the beginning of the second quarter, the ERGIS Group launched a line for the manufacturing of a multilayer PE stretch film in the plant in Oława, thus increasing its film production capacity up to 50,000 annually, i.e. by approx. 66%. The Group’s Oława plant is now the only manufacturer in the Central and Eastern Europe, which may manufacture the 33-layer film featuring exceptional properties.

Further, the PET film manufacturing line, relocated from MKF-Folien, was installed in the Wąbrzeźno plant. Its start-up is scheduled for completion in May this year. At the same time, Flexergis launched a new lamination line for food wraps, which allows the Group’s product range to be extended.

FINANCIAL RESULTS - DETAILS

 

Financial results of the ERGIS Group after the first quarter of 2012 are presented in the following table:

PLN '000

Q1 2011

Q1 2012

Change

Revenue

154,555

156,772

+1.4%

Operating profit

3,655

3,736

+2.2%

EBITDA

8,551

8,463

-1.0%

Unrealised foreign exchange differences

- 526

4,127

+684.6%

Net profit

1,889

3,601

+90.6%

The Group’s results in the first quarter of 2012 were influenced by two material factors: a rise in the prices of raw materials and a high EUR exchange rate.

The trend of a small reduction in prices observed in Q4 2011 reversed again in Q1 2012. In turn, a relatively high EUR exchange rate was favourable for the Group (an average exchange rate in Q1 2012 was higher by approx. 5% in Q1 2011), which improved the export sales margin. A drop in the EUR exchange rate at the end of the quarter improved the Group's financial result due to positive unrealised FX differences.

Despite high prices of raw materials, the Group’s profitability in Q1 2012 was alike to that achieved last year. The margin in Q1 2012 was PLN 19.9 million, while in the same quarter of 2011 it was PLN 19.2 million. Similarly, the profit on sales and operating profit stood at a slightly higher level. EBITDA amounted to PLN 8.5 million, thus reaching the value close to that of Q1 2011.

 

The amounts of gross profit and net profit for Q1 2012 are satisfactory due to the FX differences. In Q1 2012, their balance was positive (PLN +4.1 million), while in Q1 2011 these values were negative (PLN -0.5 million). Other components of the net profit stood at a level close to that of Q1 2011.

As far as the structure of sales is concerned, high dynamics of sales of PET tapes (up by 33.8%), wallpaper (up by 18.4%) and laminates (up by 11.5%) are worth noting. The increase in sales of soft films could be observed particularly on foreign markets (by 40%), and to a lesser extent on the domestic market (by 9%). The increase in sales concerned primarily insulation films, bases for wallpaper, and laminated films.

Quantitative drops in sales of certain products result from high prices of raw materials which translate into higher products prices.

Supplies to the least profitable customers were discontinues, which translated into a fall in sales of PVC and PET rigid films (-6.8% and -6.4%, respectively, in terms of value).

 

ERGIS GROUP’S INVESTMENTS

At the beginning of the second quarter, the ERGIS Group launched a line for the manufacturing of a multilayer PE stretch film in its plant in Oława, thus increasing its film production capacity up to 50,000 annually, i.e. by over 66%. The Group’s Oława plant is now the only manufacturer in the Central and Eastern Europe, which may manufacture the 33-layer film (including nano layers), featuring exceptional properties.

This investment’s outlays totalled PLN 24 million, of which PLN 12 was spent in 2012. The investment is partly 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).

Further, the PET film manufacturing line, relocated from MKF-Folien, was installed in the Wąbrzeźno plant. Its start-up is scheduled for completion in May this year. The value of the relocation is estimated at approx. PLN 4 million. The relocation will allow the Group to regain a part of profitability lost as a result of the increases in raw material prices.

At the same time, Flexergis launched a new lamination line for food wraps, which allows the Group’s product range to be extended.

The first quarter saw a final phase for the implementation of three investments which are material for the Group and which are to help regain the profitability of production which decreased as a result of significant increases in prices, that has been observed since mid-2010. I am convinced that this great effort will contribute to the improvement of the Group’s financial results,” 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: 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 manufacturer of PE stretch film (stretch film used for e.g. wrapping loads on pallets), as well as Central and Eastern Europe's leading manufacturer of PVC products: soft films (insulation and special purpose), compounds, wallpaper and windowsills. An important segment in the Group’s operations, is the manufacturing of PVC, PVC/PE and PET rigid films, used for the manufacturing of pharmaceuticals, food and technical packaging. The Group is also a manufacturer of flexible food wraps. The Ergis Group is an important manufacturer of PET tapes (used for fastening medium heavy and heavy products and loads), PVC thermoshrink films (used, e.g. for food packaging) as well as a distributor of BOPP film (used mainly for packaging manufacturing).

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