Ergis

Press Release

13 November 2013, 15:49

Ergis Group after three quaters of 2013: increase in sales and operating results

THE ERGIS GROUP AFTER THREE QUARTERS OF 2013: INCREASE IN SALES
AND OPERATING RESULTS

 

The ERGIS Group, a leader in plastics processing in the Central and Eastern Europe, recorded an increase in sales after three quarters of 2013, at a level of PLN 520 million, i.e. 7.5% more than a year before.The value of EBITDA in this period amounted to PLN 39.4 million (increase by 25%) and the operating profit equalled PLN 10.9 million (increase by 39.6%).

 

The net result of the Group after three quarters of this year was unfavourably influenced by negative currency exchange differences.Despite that, the Group’s net profit in this period amounted to PLN 9.2 billion, which means that it was higher by 26.3% from the one recorded in an analogous period of the previous year.

 

Higher profitability results from increasing the sales volume and reorganising the sales of rigid films, which includes relocating some of the production from Berlin to Wąbrzeźno, as well as from adjusting margins in the sector of highly stretchable stretch films.

 

On 15 October, ERGIS-Eurofilms S.A. entered into an agreement with Windmoeller & Hoelscher KG for the supply of the second process line for the production of nanoERGIS film.The cost of this investment will amount to PLN 18 million, and the launching of the process line is scheduled for the first quarter of 2014.

 

In the third quarter, the Ergis Group relocated its process line for the production of rigid PVC film and PVC/PE laminates from Berlin to Wąbrzeźno (the process line has not been used recently), in order to handle the increasing number of orders for rigid PVC and PVC/PE films.The sales of products from this process line are to be launched in the first quarter of 2014.

  

FINANCIAL RESULTS – DETAILS

 

The financial results of the ERGIS Group after three quarters of 2013 are presented in the table below:

 

in PLN '000

Q3 2013

Q3 2012

Change

Q1-Q3 2013

Q1-Q3 2012

Change

Revenue

181,699

171,558

+5.9%

520,058

483,604

+7.5%

Operating profit

10,955

7,847

+39.6%

23,349

12,850

+81.7%

EBITDA

16,416

13,127

+25.0%

39,388

28,309

+39.1%

Unrealised foreign exchange differences

1,157

316

n/a

-2,044

3,966

n/a

Net profit

7,680

4,805

+59.8%

9,186

7,274

+26.3%

 

The Ergis Group recorded good financial results, both in the third quarter of 2013 and cumulatively after three quarters, despite a not very favourable situation with regard to raw materials.

 

An increase in the sales of industrial packaging (by 25%) is worth noticing. It results from launching a new process line for the production of the nanoERGIS film in the second quarter of 2012.

 

A further increase in sales of printed packaging (by 7.1%) is a result of systematic development of the machine park for producing this type of products, and a growth in the sales of rigid packaging films (by 4.7%) is connected with an increase in competitiveness of this product range after the relocation of a part of the production lines from Berlin to Wąbrzeźno.

 

Again, the Group recorded a slight decrease (by 1.5%) in the sales of soft PVC film, mainly with regard to products related to construction industry (veneer films, wallpaper base films).

 

A drop in sales recorded in the “other sales” item (by 30.4%) was attributable to a negative dynamics in the sales of compounds and extruded PVC products which resulted from the Group’s withdrawal from the production of panels, windowsills and wallpapers.

 

The third quarter of 2013 was advantageous for the Group with regard to operating profitability.The margin amounted to PLN 32.3 million (cumulatively PLN 81.1 million) whereas in an analogous quarter of 2012, it equalled PLN 24.5 million (cumulatively PLN 62.6 million), which means an increase by 32% (cumulatively by 30%).Similarly, the profit on operating activity (EBIT), which increased after the third quarter of 2013 by 39.6% and cumulatively since the beginning of the year – by 81.7%, stood at a visibly higher level.In the same period, the growth dynamics of EBITDA amounted to 25% and 39.1%, respectively.An improvement in profitability applies both to Ergis-Eurofilms S.A. and to its subsidiaries.

 

An increase in profitability results from increasing the sales volume, the undertaken reorganizational actions conducted mainly in the rigid films sector, including relocating production means from Germany to Poland, as well as from adjustment of margins in the sector of highly stretchable films.

 

The amounts of gross profit and net profit in the third quarter of 2013, as well as cumulatively, also look better compared to similar costs with regard to currency exchange differences.Also cumulatively both profits were higher, despite the clearly unfavourable costs related with currency exchange differences (for three quarters of 2012 they were positive and amounted to PLN +3.97 million, whereas for three quarters of 2013 they were negative and amounted to PLN -2.04 million.)Despite that, the Group’s net profit after three quarters amounted to PLN 9.2 billion, which means that it was higher by 26.3% from the one recorded in an analogous period of the previous year.

 

Tadeusz Nowicki, President of the Management Board of ERGIS-EUROFILMS:

“We had a profitable third quarter during which we recorded satisfactory financial results, despite the not very favourable situation with regard to raw materials and the negative impact of the currency exchange differences on our net result.The visible improvement in the Group’s profitability results primarily from increasing the sales volume and reorganising the sales of rigid films, including relocating a part of the production from Berlin to Wąbrzeźno.The result was also positively influenced by the development of the sales of nanoERGIS films. Observing the positive effects of relocating a part of the production of rigid films from Berlin to Wąbrzeźno, we decided also to transfer to Poland the second processing line for the production of PVC films and PVC/PE laminates, which would allow us to handle the increasing number of orders for this type of products.We intend to launch the sales of the products from this line in the first quarter of 2014.At the same time, we have already initiated works aimed at launching another process line for the production of nanoERGIS film in Oława in the first quarter of 2014.”

 

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 atwww.ergis-eurofilms.euwww.ergis-eurofilms.eu