May 10,2017-- The Board of Directors of the Europac Group (Papeles y Cartones de Europa S.A.) has approved the results for the first quarter of 2017, which record net profit of 11 million euros, 9.5% up on the same period last year. In this regard, there was a noteworthy fall in finance costs, 45% down on last year, as a result of the lower debt volume and the novation of the syndicated loan signed last December.
?Sales rose by 7.2% to 282 million euros, while consolidated EBITDA amounted to 31 million euros, 3.2% up on last year
The impact of market prices was offset by the increase in sales volumes in Paper and Packaging and the effect of the ongoing internal management programmes
The rises in paper sales prices and the fall in the price of the raw material will be reflected in the income statement as from the second quarter
Reduction in finance costs of 1.8 million euros, a drop of 45%, as a result of the continued reduction of the debt and the actions destined to reduce the finance costs.
?Furthermore, sales rose by 7.2% to 282 million euros. Consolidated EBITDA amounted to 31 million euros, 3.2% up on last year, while consolidated EBIT grew by 4.3% to 19 million euros. These results were achieved in a market context characterised by a fall in paper sales prices and an increase in the price of the raw material compared with the same period of 2016. Specifically, according to sector data, between 1 January and 31 March this year, the price of recovered paper rose by 17%, while the sales prices of kraftliner paper and recycled paper fell by 3% and 5%, respectively.
However, the market behaviour was offset by the increase in sales volumes in the paper and packaging business lines, as well as the continuity of the internal operational and commercial management projects and the positive development of the Packaging Division. All of the above led to an increase in the year-on-year EBITDA margin of 1.2 percentage points to 15.7%.
José Miguel Isidro, Executive Chairman of Europac, states that, “these are good results in an adverse scenario, which demonstrate the strength and soundness of the company’s activity”. According to the Executive Chairman, “the announced rises in paper sale prices and the fall in the price of the raw material will be fully reflected in the income statement as from the second quarter of the year and, in the current conditions, we predict a good year with constantly improving results”.
Performance of the business lines
In the paper business line, the aforementioned market behaviour was partially offset by the increase in sales volume both in kraftliner paper and in recycled paper, which led to growth in revenue of 7.6%. Against this background, the strength of final demand and the rises in paper prices, which have now mostly been implemented, allow us to forecast improved performance of the Paper Division as from the second quarter.
For its part, the Packaging Division recorded an increase in sales of 6.3%, with a rise in sales volumes in every market, and a 30% increase in EBITDA on last year. In this context, the commitment to greater added-value projects based on high quality printing, the logistics cost of packaging and structural design led to an increase in the year-on-year EBITDA margin, which is almost twice as high as that recorded in the first quarter of 2016.
It should be noted the influence of 1.5 €M of non-recurring results due mainly to the sale of Europac Logística, Lda., with a goodwill of 2.3 million euros.
So far this year, the company has acquired a packaging factory in Lucena (Cordoba) and a waste management plant in Laguna de Duero (Valladolid). These acquisitions are a result of Europac’s desire to grow and strengthen its strategic positioning in the Spanish packaging and waste management markets. In addition, the company sold its logistics operator in the commercial port of Viana do Castelo to Grupo Nogar.
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