| ARCTIC PAPER S.A. THROUGHOUT 2010: FULL USE OF PRODUCTION CAPACITY PROFITABILITY AFFECTED BY UNFAVOURABLE CHANGES IN RAW MATERIAL PRICES AND EXCHANGE RATES |
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Arctic Paper S.A., the second-largest European producer of bulky book paper and one of Europe’s leading suppliers of high-quality graphic paper, generated revenues of nearly PLN 2.3 billion in 2010, 26.5 % higher than in 2009. The company earned a net profit of PLN 28.8 million and an operating profit of almost PLN 17.7 million.
Despite a high 95 % utilization of production capacity at all of the Group’s paper mills during 2010 and higher sales revenues, financial results were still adversely affected by unfavourable market factors, such as continued high pulp prices and exchange rates that were unfavourable to the company compared to the previous year.
During the period April - December 2010, the Group introduced three significant paper price increases in local currencies (mainly EUR). Commencing later this month (March 2011), the Group plans to implement further price increases.
FINANCIAL RESULTS – DETAILS
Financial results of the Arctic Paper Group, 2010:
|
(PLN ’000) |
Q1-4 2010 |
Q1-4 2009 |
Change(%) |
Q4 2010* |
Q4 2009 |
Change (%) |
| Sales revenue |
2,287,731 |
1,809,085 |
+26.5% |
598,302 |
432,769 |
+38.2% |
| Operating profit /loss |
17,680 |
179,311 |
-90.1% |
25,876 |
30,909 |
-16.3% |
| EBITDA |
146,294 |
246,575 |
-40.7% |
87,073 |
48,195 |
+80.7% |
| Net profit |
28,816 |
132,400 |
-78.2% |
34,990 |
31,148 |
+12.3% |
* The financial results achieved in Q4 2010 were strongly affected by settlement of the acquisition price for Arctic Paper Grycksbo and a write-down for permanent impairment in value of Arctic Paper Mochenwangen.
The Arctic Paper Group’s sales revenues for the year were 26.5 % higher than in 2009. In Q4 of 2010 alone, sales revenues were 38.3 % higher than in 2009t.
FACTORS AFFECTING FINANCIAL RESULTS – PULP AND CURRENCIES
PULP PRICES
The main factor having an unfavourable impact on margins and financial results was the continued very high price for pulp, the basic raw material used by the Group. Declines in pulp prices in Q4 2010 proved smaller than anticipated by analysts, and prices remained just a few percent lower than in Q3.
Pulp prices therefore constituted a major burden on the Group’s results. The average price of pulp in Q4 2010 was nearly 24 % higher for NBSK and 29 % higher for BHKP than in Q4 2009. Cumulatively for the year 2010, the average pulp price increased by 41.5 % for NBSK and 50.3 % for BHKP from 2009.
EXCHANGE RATES
In 2010, there was strong growth for Polish zloty and Swedish kronor against the euro, which unfavourably impacted on the Group’s financial results, primarily with respect to sales revenue generated by Arctic Paper as expressed in PLN.
For 2010 as a whole, the average PLN/EUR rate was 7.7 % lower than in 2009, which had an unfavourable impact on revenue generated by the paper mill in Kostrzyn, Poland. Meanwhile, the 2010 SEK/EUR rate was 10.2 % lower than in 2009, which had a substantial negative impact on revenue generated on the European market by the paper mills located in Sweden.
SALES VOLUME
In Q4 2010 and for 2010 as a whole, the Arctic Paper Group achieved an increase in sales volume of nearly 30 % compared to 2009.
Sales volume in Q4 2010 was 188,000 tonnes, or 138,000 tonnes excluding Arctic Paper Grycksbo.
Growth in total volume and revenues in 2010 resulted mainly from sales generated by products from Arctic Paper Grycksbo, which are reflected in the results starting 1 March 2010.
“Our results throughout 2010 remained under great pressure from unfavourable market factors, such as the continuing high price of our basic raw material, pulp, and the appreciation of PLN and SEK against the EUR,” said Michał Jarczyński, CEO of Arctic Paper S.A.”This had a negative impact on the Group’s financial results, mainly in terms of Arctic Paper’s sales revenue expressed in PLN.
Our paper mills have been operating at nearly full production capacity, despite the lack of visible revival in demand on the paper market, which demonstrates the effectiveness of our sales operations,” added Jarczyński. “We are continually working on improvements in the efficiency of specific paper mills and, in addition, we plan to introduce further price increases later this month.
“We are also pleased to see action taken by the European Union, which, in response to practices employed by some paper producing groups outside Europe, has introduced protective tariffs for coated paper imported from Asia. This should improve price stability for paper in Europe.”
For more information, please contact:
Iwona Mojsiuszko, M+G
tel. (+48) 22 625 71 40, (+48) 501 183 386
e-mail: iwona.mojsiuszko@mplusg.com.pl
About Arctic Paper S.A.:
Arctic Paper S.A. is one of the leading European manufacturers of bulky book paper and graphic fine paper. The group produces high quality coated, uncoated wood-free and uncoated wood-containing papers. The main customer groups are primarily the printing and advertising industries and end users in the book and magazine
publishing industry.
The Group’s product portfolio consists of the brands Amber, Arctic, G-Print, Munken, Pamo and L-Print. Production is carried out at four different European paper mills: in Poland at Arctic Paper Kostrzyn; in Sweden at Arctic Paper Munkedals and Arctic Paper Grycksbo, and in Germany at Arctic Paper Mochenwangen. The total production capacity of the Group’s four paper mills is 810,000 metric tonnes of paper per year. Arctic Paper S.A. is listed on the Warsaw Stock Exchange since October 2009. The majority shareholder of Arctic Paper S.A. is the Swedish company Arctic Paper AB, and 25.2 % of the shares are held by other stock market investors. The company currently employs 1,650 people across Europe and has sales offices in 15 European countries.
More information at www.arcticpaper.com |
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