Ergis

Press Release

14 May 2013, 13:49

Ergis Group after Q1 2013: Increase in sales and significant improvement of operating profitability

Komunikat prasowy

PRESS RELEASE

 

Warsaw, 14 May 2013

 

 

ERGIS GROUP AFTER Q1 2013: INCREASE IN SALES AND SIGNIFICANT IMPROVEMENT OF OPERATING PROFITABILITY

 

 

The ERGIS Group, a leader in plastics processing in the Central and Eastern Europe, recorded an increase in sales after Q1 2013, at a level of PLN 162.1 million, i.e. 3.4% more than a year before. EBITDA for that period amounted to PLN 11.3 million (which represented an increase of 33.4% compared to the figure for the previous year), while operating profit was PLN 6 million (up by 61.6%).

 

This considerable increase in operating profit is, in the opinion of the Company, the result of reorganising the Company’s rigid film business, which involved, in particular, relocating part of the Company's rigid film production from Germany to Poland and of recording successful sales results for the high stretchability nanoERGiS film manufactured on the Company’s new line in Oława.

 

The Company's net profit for the first quarter was adversely affected by exchange translation differences – the figure amounted to PLN 2.5 million (PLN 3.6 million for the same period of the previous year). In the first quarter of 2012, the exchange translation differences were positive and amounted to PLN +4.1 million, compared to the negative differences of PLN -1.3 million for the first quarter of 2013.

 

Currently, the Group’s business focus is to continue taking advantage of its competitive edge achieved through investment in a line for the manufacture of 33-layer nano stretch film at the Oława plant and to continue reducing its production costs at the Berlin facility.

 
FINANCIAL RESULTS - DETAILS

 

Financial results of the ERGIS Group after the first quarter of 2013 are presented in the following table:

 

 

PLN ‘000  

 

Q1 2013

 

Q1 2012

 

Change

Revenue on sales

162,130

156,772

+3.4%

Operating profit

6,036

3,736

+61.6%

EBITDA

11,289

8,463

+33.4%

Unrealised foreign exchange differences

-1,275

4,127

-

Net profit

2,453

3,601

-31.9%

 

The Group’s sales revenue for the first quarter increased by 3.4% compared to the figure for the same period of last year, with a very similar average EUR exchange rate.

 

The sales of stretch film (the Company’s key products) in this period increased by 26% which results from the launch of a new stretch film manufacturing line in the first half of 2012.

 

As far as the sales structure for the other products in the first quarter of 2013 is concerned, it is worth noting the high increase in sales of PET films (by 26.3%). This rise is the result of the Company gradually recovering its market position after relocating its production line to Poland and in sales of printed packaging (an increase by 15.4%).

 

The situation on the raw material market in the first quarter of 2013 was not very favourable for the industry and the Group.Although the prices of certain strategic materials (PVC, DINP) were lower compared to the previous quarter, they were higher than those in the first quarter of last year.In the case of PET, the situation was opposite – the prices in the first quarter rose slightly but were lower than the prices in the same period of last year.In the case of the main raw material (LLDPE), the prices were higher compared to those in both the previous quarter and the same period of last year.

At the same time, the first quarter of 2013 was a very good time for the Group in terms of the operating profitability.The profit margin figure amounted to PLN 24.6 million, compared to PLN 19.9 million in the first quarter of 2012, which means an increase of 24%.The Group's EBITDA and operating profit were noticeably higher, arriving at 33.4% and 61.6% respectively.In the opinion of the Management Board, this considerable increase in operating profit is the result of, above all, reorganising the Group’s rigid film business, which involved, in particular, relocating part of rigid film production from Germany to Poland and of recording successful sales results for the high stretchability film manufactured on the new line in Oława.

 

These two factors more than offset the 10-percent decrease in the profit margin on the sale of soft PVC films.

 

The Company’s net profit for the first quarter was affected by exchange translation differences. In the first quarter of 2012, the differences were positive and amounted to PLN +4.1 million, compared to the negative differences of PLN -1.3 million for the first quarter of 2013.As a result, the net profit figure was PLN 2.5 million, compared to PLN 3.6 million, which means a decrease of 31.9%.

 

”We are satisfied with the results for the first quarter of this year. Although the situation on the raw material market was not very favourable for us, we succeeded in improving our operating profitability considerably, which gave us an increase in operating profit by as much as 61.6%. Above all this is a result of reorganising the Group’s rigid film business, which involved, in particular, relocating a part of rigid film production from Germany to Poland and of recording successful sales results for the high stretchability film manufactured on the new line in Oława. Despite the unfavourable market situation, we are still improving our sales, especially of PET films and printed products. These are products for which we made investments or optimised our production process," said Tadeusz Nowicki, president of the Management Board of ERGIS-EUROFILMS.

 

“Currently, our business focus is to continue taking advantage of our competitive edge achieved through investment in a line for the manufacture of 33-layer nanostretch film at the Oława plant and to continue reducing our production costs at the Berlin facility," Tadeusz Nowicki added.

 

 

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), 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