Ergis

Press Release

15 May 2014, 11:25

Ergis Group after first months of 2014

ERGIS GROUP AFTER FIRST MONTHS OF 2014: VERY GOOD FINANCIAL RESULTS, LAUNCH OF THE SECOND nanoERGIS FILM PRODUCTION LINE AHEAD OF THE SCHEDULE, ANNOUNCEMENT OF DIVIDEND POLICY  

 

After the first quarter of 2014, the ERGIS Group, a leader of plastics processing in the Central and Eastern Europe, generated revenue in the amount of PLN 163.9 million (up by 1.1% compared to the previous year), operating profit of PLN 9.2 million (52.4% more than achieved after in Q1 2013) and net profit of PLN 5.9 million (an increase of 141.7% compared to the previous year). 

  

Increase in profitability results from higher sales volumes of most products ranges, reorganisation measures undertaken primarily in the rigid films business, including relocation of production means from Germany to Poland, as well as higher share of nanoErgis film in total sales of stretch film. 

 

In the first quarter, the ERGIS Group completed, ahead of the schedule, the start-up of the new line for the production of nanoERGIS film in its Oława plant.As a result, the ERGIS Group has two nano film production lines (the first one was launched in the same location in 2012) which are the only lines in Europe that fully use the capabilities offered by the nanotechnology.Both of them were supplied by a German company Windmoeller & Hoelscher KG. The marketing of the new line film is performed as per the plan.The cost of the investment is approx. PLN 18 million.

 

Concurrently, the ERGIS Group opened for its customers a research laboratory ELSA (Ergis Load Stability Academy) which enables them to carry out tests aimed at reducing the amounts of stretch film used, due to a better application of unique properties of the nanoERGIS film.  

 

In April 2014, the Supervisory Board issued a positive opinion regarding the dividend policy proposed by the Management Board.The Management Board moved for payment of dividend from profit generated in 2013 in the amount of PLN 0.1 per share.

 

FINANCIAL RESULTS - DETAILS

 

Financial results of the ERGIS Group after the first quarter of 2014 are presented in the following table:

 

PLN ‘000

Q1 2014

Q1 2013

Change

Revenue

163,915

162,160

+1.1%

Operating profit

9,201

6,036

+52.4%

Gross profit

7,662

2,913

+163.0%

EBITDA

14,703

11,289

+30.2%

Unrealised foreign exchange differences

69

-,1,275

-

Net profit

5,930

2,453

+141.7%

 

The ERGIS Group has recorded very good financial results in the first quarter of 2014.At a slightly higher EUR/PLN exchange rate (by 0.4%), the Group’s revenue in Q1 increased by 1.1% compared to the analogous period of the previous year.  

 

The discussed period saw an increase in the sales of most product ranges. The increase in sales of rigid packaging films by 11.5% is due to the optimisation of production lines location and the resulting growth in competitive edge of the products. Increase in “other sales” by 19.1% is a result of an increase in sales of compounds. Lower sales of industrial packaging (by 11.8%) is a result of a temporary reduction of production capacity related to the launch of a new line for the nanoErgis film; the assembly of the line required two oldest stretch film production lines to be stopped.  

 

The first quarter’s operating profitability was good.The margin in was PLN 27.1 million, while in the same quarter of 2013 it was PLN 24.6 million, which means an increase of 10%.Similarly, the operating profit and EBITDA levels were significantly higher.Realised EBITDA is PLN 14.7 million (PLN 11.3 million in Q1 2013).  

 

The improvement in profitability applies primarily the segment of packaging, both in the Parent and its main subsidiaries. Increase in profitability results from higher sales volumes of most products ranges, reorganisation measures undertaken primarily in the rigid films business, including relocation of production means from Germany to Poland, as well as higher share of nanoErgis film in total sales of stretch film. 

 

The values of gross and net profit in Q1 2014 were significantly higher than those generated in Q1 2013.

 

MARKET OVERVIEW

 

In the first quarter of 2014 the prices of the main strategic raw materials (PVC, DINP, LLDPE, PET) were slightly lower as compared to both the previous quarter and the same quarter of the previous year (only the price of PVC was slightly higher than in the fourth quarter of 2013). DINP and PET prices decreased significantly close to 10%.To sum up, one can say that the raw material situation in the first quarter of 2014 was favourable.  

 

The influence of unrealised currency exchange differences in the past quarter is negligible (PLN +69,000), while in Q1 2013 those differences reduced the result by PLN 1.3 million.  

 

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

”The successful first quarter in which we earned good financial results has already passed. Increase in profitability results from higher sales volumes of most products ranges, reorganisation measures undertaken, including relocation of production means from Germany to Poland, as well as higher share of nanoErgis film in total sales of stretch film.

 

The last year’s financial results and a good beginning of 2014 allow the Company to announce for the first time a payment of dividend from the 2013 profit.”                                                                                                                                                

  

ADDITIONAL INFORMATION  

 

The ERGIS Group is a leader in plastics processing in the Central and Eastern Europe. It has six production plants of which four are located in Poland and two in Germany.The Group’s profile is the production of food packaging (PVC- and PET-based films and barrier laminates, printed multilayer laminates) and industrial packaging (LLDPE stretch films and PET tapes). Other ERGIS products include films for medicines packaging, hydro-insulation films and PVC compounds.In 2013, revenue of the ERGIS Group exceeded PLN 673 million. 

 

Additional information is also available at www.ergis.eu