Ergis

Press Release

17 November 2008, 08:50

ERGIS GROUP AFTER THREE QUARTERS – DYNAMIC GROWTH OF SALES

The ERGIS Group, a leader in the plastics manufacturing industry of Central and Eastern Europe, after three quarters of 2008 recorded revenue on sales of PLN 426.964 million, over 50% more than in the parallel period of 2007. The Group’s operating profit in the period increased to PLN 14.317 million, while its net profit - to PLN 8.559 million.

 Key events:

  • In the third quarter of 2008 the Ergis Group recorded an increase in revenue, reaching PLN 134.8 million, a 41% increase over the corresponding period of 2007.
  • In the third quarter alone, the Group’s foreign sales reached nearly PLN 70 million, as compared to PLN 29.8 million in the analogous period of 2007. Sales in Poland remained at a stable level of over PLN 65 million.
  • After three quarters of 2008, the Group’s foreign sales constituted nearly 52% of total sales, as opposed to over 31% in the preceding year. The clear increase in financial results stems mainly from the expansion of the Group through incorporating the companies of MKF-Folien GmbH, Schimanski GmbH and Flexergis Sp. z o.o., accompanied by a stable development of operations located in Poland.
  • Despite the fact that the Group incurred high costs of marketing and sales necessary for strengthening its leading market position in the face of increasing competition, operating profit grew by 31% in the third quarter alone, reaching PLN 4.3 million, and by over 6% in the nine months of the year, to a total of PLN 14.3 million.
  • The net profit earned by the ERGIS Group after 3 quarters of 2008 amounted to PLN 8.56 million and constitutes a 2% increase over the net profit earned after 3 quarters of 2007.

FINANCIAL RESULTS – DETAILS

The financial results of the ERGIS Group after three quarters of 2008 are presented in the table below:

PLN ‘000

Q3/2007

Q3/2008

Change

Q1-Q3/2007

Q1-Q3/2008

Change

Revenue on sales

95,694 

134,831

+40.9%

283,825

426,864

+50.4%

Operating profit

3,296

4,309

+31.0%

13,475

14,317

+6.3%

Net profit

1,608

 307

-80.9%

8,374

8,559

+2.2%

The limitations of the growth of net profit after three quarters were caused to a large extent by the financial costs resulting from the loan taken for the purchase of the German companies, which the Company initially intended to refinance through issuing shares. Considering the situation in the Warsaw Stock Exchange, the Company chose to postpone the planned issue by at least 6 months.

The difficult market circumstance, visible especially in Spain and Germany, as well as the unfavourable exchange rate for the British pound caused the revenue and net profit of the German companies to be lower than estimated.

On September 4, 2008, the Company’s Wąbrzeźno Plant suffered a transformer malfunction followed by an explosion, resulting in an interruption in the Company’s production process. The impact of the event on the Group’s results will not exceed PLN 1 million.

                                                                                 

PLANS OF ERGIS-EUROFILMS

In 2008 ERGIS-EUROFILMS places focus on maximising the synergies resulting from the acquisition of Flexergis, MKF-Folien GmbH and Schimanski GmbH. The plans the Group implements concern, first of all, the development of sales as regards goods produced by MKF-Folien and Schimanski in the Polish market, as well as the development of sales of products of ERGIS Group including PET tapes, stretch films and laminates for food products), both through the existing distribution network of ERGIS-EUROFILMS and by sales forces of MKF-Folien and Schimanski.

“The ERGIS-EUROFILMS Group systematically improves its position in Central and Eastern Europe. The acquisitions we had conducted allowed us to further adjust our wide and diversified range of products to the requirements of the market. This works to strengthen our development potential and to preserve a stable situation of the Company even in the face of downturn of the global economy,” commented Tadeusz Nowicki, the President of the Management Board of ERGIS-EUROFILMS SA.

 

ADDITIONAL INFORMATION

ERGIS-EUROFILMS was created through this year’s merger of the listed Eurofilms S.A. and its trade investor, ERGIS. The merged Company is Poland’s largest and one of Central and Eastern Europe’s leading manufacturers 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 Company is Poland's second 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 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). Additional information is also available at www.ergis-eurofilms.eu

MKF-Folien GmbH Minderjahn + Kiefer is one of leading German manufacturers of PET and PVC rigid films, used mainly in food industry and in technical sectors. The company production capacity is 20,000 tons of PET film, and 12,500 tons of PVC film.

Schimanski GmbH is a manufacturer of PET/PE and PVC/PE rigid films laminates, used mainly in food industry (e.g. for packaging meat or cheese, with the annual production capacity of about 16,000 tons.