Ergis
19 2013, 10:21

THE ERGIS GROUP AFTER THE FOURTH QUARTER:STABLE SALES DEVELOPMENT, Q4’S OPERATING RESULTS AFFECTED BY HIGH RAW MATERIAL PRICESN, TEMPORARY REDUCTION OF PROFITABILITY AS A RESULT OF PLACING NEW PRODUCTS ON THE MARKET

PRESS RELEASE

 

Warsaw, 18 February 2013

 

 

THE ERGIS GROUP AFTER THE FOURTH QUARTER:STABLE SALES DEVELOPMENT, Q4’S OPERATING RESULTS AFFECTED BY HIGH RAW MATERIAL PRICES

 

 

In the fourth quarter of 2012, the ERGIS Group, a leader in plastics processing in the Central and Eastern Europe, generated sales revenue at a level of PLN 149.9 million, which indicates an increase of 1.3% as compared to the results achieved in the previous year. Operating profit amounted to PLN 2.5 million (up by 3.2%), and net profit – PLN 0.312 million, while in the same period of the previous year loss was recorded. The Group’s operating results in the Q4 were affected by raw materials’ prices which increased significantly in this period.

 

Cumulatively after four quarters, the revenue exceeded the amount of PLN 633.5 million (up by 1.8% over the last year), operating profit reached PLN 15.3 million (by 4.5% lower than after four quarters of 2011), which is a reflection of the second quarter’s results which were not as good as in Q2 2011. Net profit reached PLN 7.6 million, given a previous year’s loss of PLN -27 million.

 

At present, the Group is focused on taking full advantage of production capacity on the line for the production of a thirty-three-layer nano stretch film, which was launched in the first half of 2012 in Oława, as well as on further increasing production efficiency of PET film production on the line transferred from Berlin to Wąbrzeźno.

 


FINANCIAL RESULTS - DETAILS

 

Financial results of the ERGIS Group after four quarters of 2012 are presented in the table below:

 

 

PLN ‘000 PLN

 

Q4 2012

 

Q4 2011

 

Change

 

Q1-Q4 2012

 

Q1-Q4 2011

 

Change

Revenue

149,875

148,006

+1.3%

633,479

622,385

+1.8%

EBITDA

7,670

7,413

+3.5%

36,000

35,900

+0.3%

Operating profit

2,472

2,395

+3.2%

15,322

16,038

-4.5%

Unrealised foreign exchange differences

1,335

-856

-

 

5,301

-7,454

-

 

Net profit

312

-29,417

-

7,586

-27,618

-

 

The fourth quarter 2012 was a period of a significant increase in prices of basic raw materials used by Ergis. The prices of PVC, DOP and LLDPE increased by 16.9%, 19% and 16%, respectively, over the analogous period of the previous year. Only PET virgin (down by approx. 4%) and RPET (down by 1.3%) were the raw materials whose prices dropped slightly.

 

Given a decrease in the EUR/PLN exchange rate (by 0.6% against the previous quarter and by 6.9% against the same period of the previous year), the exports profitability and the value of sales and profits on foreign transactions, as translated into PLN, decreased slightly, while the import profitability increased; the value of loans contracted in EUR, as translated into PLN, also decreased.

 

Regardless the lower EUR/PLN exchange rate, the revenue on sales in the fourth quarter of 2012 was higher by 1.3% over the same period of the last year (by 1.8% for the whole year).

The sales of stretch film in 2012 increased by 12% which results from the launch of a new stretch film manufacturing line in the first half of 2012.

 

As far as the structure of other sales in the entire 2012 is concerned, noteworthy is a high dynamics of sales of soft PVC films (by 7.3%), printed packaging (up by 13.7%), as well as PVC and PVC/PE rigid films (by 8.4%). The increase in soft films refers mainly to foreign markets (by 31% by quantity and value), while the domestic market saw a 7% decrease in terms of value.

 

It was more difficult to realise profits in Q4 due to the increase in prices of raw materials.

 

In Q4, EBITDA was PLN 7.7 million, compared to PLN 7.4 million in the same period of last year. Cumulatively, EBIDTA for 2012, i.e. PLN 36.0 million is also slightly higher than that for 2011 (PLN 35.9 million).

 

Gross and net profit both in Q4 2012 and cumulatively, are significantly better than in 2011, which is a result of currency exchange differences and a write-off made in December 2011 regarding the goodwill of the German companies amounting to PLN 33 million. In Q4 2012, currency exchange differences were positive and amounted to PLN +1.3 million (cumulatively PLN +5.3 million), while in Q4 2011 their value was negative, and amounted to PLN -0.86 million (cumulatively PLN -7.5 million).

 

“In the fourth quarter we focused on further development of sales in those sectors of our operations, which were related to investments completed in 2012, namely: the line for the production of nano stretch film launched in Oława, the line for the production of rigid films relocated from Berlin to Wąbrzeźno, as well as a new line for packaging lamination in Nowy Sącz.We are satisfied with sales dynamics in those segments, although at the same time the Q4’s operating results were being affected by the prices of our key raw materials, which in that period rose by more than a dozen percent,”said Tadeusz Nowicki, President of the Management Board of ERGIS-EUROFILMS.

 

For more information, contact:

 

Małgorzata Kot, ERGIS - EUROFILMS S.A.

tel. 604 159 103, 604 159 159

e-mail: kot@ergis.eu

 

Magda Kołodziejczyk, M+G

tel. (22) 416 01 02, 501 16 88 07

e-mail: magda.kolodziejczyk@mplusg.com.pl

 

 

DODATKOWE INFORMACJE

 

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) and compounds.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, as well as for flexible food wraps. The Ergis Group is also 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