Arctic Paper S.A., the second-largest European producer of bulky book paper in terms of production volume and one of Europe’s leading producers of fine graphic paper, achieved strong results through the first three quarters of 2009. The group generated sales revenue of almost PLN 1.38 billion, up nearly 50% from the year before. Operating profit more than doubled compared to the first three quarters of 2008, to PLN 148.4 million. Net profit was more than PLN 101.2 million, up 131% over the same period in 2008. The operating margin grew to 10.8%, from 5.2% in 2008, and the net margin grew to 7.4%, from 4.7% in the first nine months of 2008.

FINANCIAL RESULTS – DETAILS
The detailed financial results of the Arctic Paper group through nine months of 2009 are presented in the table below:

During the first nine months of 2009, sales revenue grew by nearly 48%, to PLN 1,376.3 million, from PLN 930.4 million in the same period of 2008.
Half of this increase represents sales revenue generated by the paper mill in Mochenwangen, Germany, acquired in December 2008, which was not reflected in the results for the first three quarters of 2008. The rest of the growth came thanks to strong sales by the group’s operating units as well as favourable changes in foreign exchange rates, particularly EUR/PLN and EUR/SEK.
During the same period, profit on sales grew by nearly 90%, to PLN 362.9 million, from PLN 191.4 million in the same period of 2008. The profit margin on sales rose during the period from 20% to 26%. The main reason for these changes was more favourable prices for raw materials used for production in 2009 than in the previous year.
Profit on operating activity rose from PLN 48.2 million through the first three quarters of 2008 to PLN 148.4 million this year. The profit margin on operating activity grew during the period from 5.2% to 10.8%.
In the first three quarters of 2009 the company earned a high net profit, which rose by nearly 131%, to PLN 101.2 million, from PLN 43.9 million in the same period of 2008. The net profit margin grew during this time from 4.7% to 7.4%.

REALISATION OF ISSUE GOALS
On 23 October 2009, after successfully completing its public offering, the Arctic Paper S.A. debuted on the Warsaw Stock Exchange. The group raised gross proceeds of PLN 121.5 million in the IPO, which in line with the goals of the issue will be earmarked to repayment bridge financing from Bank Pekao S.A. This will enable Arctic Paper to carry out implementation of its growth strategy in efficient and flexible way.

GROWTH STRATEGY
The main goals of the Arctic Paper S.A. Group’s strategy include:
• Expansion on Central & Eastern European markets while maintaining a leading position on key markets
A strategic priority for Arctic Paper S.A. is to maintain its current position as a leader in the field of high-quality paper for Western European markets, while exploiting anticipated growth of the paper market in Central & Eastern Europe. Key elements of this strategy include exploiting the Group’s competitive advantages arising from the location and efficiency of the paper mill in Kostrzyn and the extensive sales network in Central & Eastern Europe.
• Growth in production capacity thanks to modernization and acquisition of other paper producers
Currently the group is investing in modernization of paper machinery in all its paper mills. As a result, existing production capacity will increase from the current level of 540,000 metric tonnes annually to about 600,000 tonnes within the next three years.
• Maximizing production and distribution efficiency
The group plans to continue initiatives such as maximizing energy efficiency, efficient management resources, exploitation of its strong bargaining position and maximizing the efficiency of production lines and effectiveness of distribution logistics.

The Company also plans to continue leveraging on its product offer, strong brand heritage and brand recognition.
To carry out its growth strategy, in addition to steady organic growth the company is also considering acquisition of other companies within the sector.

“We are pleased with the very strong results earned by the Arctic Paper group despite fairly difficult market conditions,” said Michał Jarczyński, CEO and President of the Management Board of Arctic Paper S.A. “During the stock market debut I said that we would demonstrate that Arctic Paper shares – investment papers - are securities of great opportunities for investors. Our results through three quarters are the best proof. We are currently concentrating on realization of our issue goals, including negotiating a potential acquisition”.