Ergis

Press Release

28 August 2014, 10:44

Ergis Group after first half of 2014: excellent financial results, profitability growth continues

ERGIS GROUP AFTER FIRST HALF OF 2014: EXCELLENT FINANCIAL RESULTS, PROFITABILITY GROWTH CONTINUES

After the first half of 2014, the ERGIS Group, a leader of plastics processing in the Central and Eastern Europe, recorded revenue in the amount of PLN 335.7 million (i.e. at a level close to that recorded in a year before), operating profit of PLN 19 million (52.9% more than achieved after in H1 2013) and net profit of PLN 12.4 million (720.8% more compared to the previous year).

Such a significant increase in profitability is primarily a result of introducing on the market of the innovative nanoERGIS stretch film and reorganisation in the rigid film segment.

In June 2014, the Company’s General Shareholders Meeting decided to pay out dividend from the 2013 profit in the amount of PLN 0.10 per share (in the total amount of PLN 3.9 million) in accordance with the adopted dividend policy and the recommendation given by the Company’s Management Board. Payments were made on 2 July 2014.

The General Shareholders Meeting held in June also decided to return to the Company previous business name, ERGIS S.A., under which the Company operated in 1998-2007.

FINANCIAL RESULTS - DETAILS 

Financial results of the ERGIS Group after in H1 2014 are presented in the table below:

 

PLN ‘000

H1 2014

H1 2013

Change

Revenue

335,720

338,359

-0.8%

Operating profit

18,955

12,394

+52.9%

Gross profit

15,904

2,544

+525.2%

EBITDA

30,242

22,972

+31.6%

Unrealised foreign exchange differences

184

-,3,201

-

Net profit

12,362

1,506

+720.8%

 

The ERGIS Group has recorded very good financial results in the first half of 2014. The Group’s revenue in this period reached PLN 335.7 million, standing at a level similar to that of last year (drop by 0.8%), at the average EUR exchange rate lower by ca. 0.8%.

H1 saw an increase in the sales of most product ranges. The increase in sales of rigid packaging films by 4.55% is due to the optimisation of production lines location carried out in previous periods, and the resulting growth in competitive edge of the products.

A fall in the industrial packaging group (by 9.35%) was a consequence of actions performed with a view to launching a new nanoERGIS stretch film production line, the installation of which (completed in Q1 2014) required that two lines which were already in operation had to be turned off, which temporarily reduced manufacturing capacity for this product range; the drop also resulted from lowering the average thickness of films on sale.

The significant increase in profitability for H1 2014 is primarily a result of launching on the market the innovative nanoERGIS film and reorganisation in the rigid film segment. Further, in H1 2014 the balance of other operating profitability was better, as a result of lowering provisions set for accounts receivable and inventories.

The Group’s EBITDA in H1 2014 increased to PLN 30.2 million, compared to nearly PLN 23 million achieved in H1 2013. Better profitability was recorded mainly by ERGIS S.A. – increase to PLN 17.7 million compared to PLN 12.5 in H1 2013, and by companies manufacturing packaging films, grouped under the Rigid Films Division – increase to almost PLN 6 million compared to 4.6 million generated in H1 2013.

The figures of gross profit and net profit in H1 2014 were significantly higher than in H1 2013, which results both from improved operating result as well as finance income and costs. As a result of a lower EUR/PLN exchange rate as at the balance-sheet date, the surplus of positive exchange differences in H1 2014 amounted to PLN 0.18 million, while in H1 2013 the value was negative and amounted to PLN -3.2 million.

MARKET OVERVIEW

In H1 2014 the prices of most strategic raw materials (PVC, LLDPE, PET) were relatively stable and had no material impact on results achieved by the Company.  

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

A very good first half of the year has just passed; we achieved excellent financial results - net result for that period is better than that recorded during the entire 2013. The significant increase in profitability primarily follows from launching the sale of the innovative nanoERGIS stretch film and reorganisation in the rigid film segment. We are happy that the reorganisation measures we carried out in last years as well as implemented investments translate into the assumed results.

Our current plans include investing in the second line for the production of Greenstrap (PET tape) and acquisition of another line for the production of flexible printed packaging in Flexergis.

 

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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 Group exceeded PLN 673 million.

Additional information is also available at www.ergis.eu