Arctic Paper Group in Q3 2015: EBITDA and operating profit significantly higher than in Q2 2015 in spite of unchanged tough market challenges

In the 3rd quarter of 2015 the financial results generated by the Arctic Paper Group from continued operations* were influenced by unchanged market challenges. EBITDA was PLN 70.5m (down 19.2% compared to Q3 2014), operating profit was slightly over PLN 43m (27.2% less than in Q3 2014), and net profit from continued operations was over PLN 22.7m (down 43.2% from the same period of 2014). Sales revenues were PLN 730.7m, that is at a similar level year-on-year.

The 3rd quarter results on EBITDA and operating profit level were significantly above those achieved in Q2 2015: EBITDA grew by 81.1% and operating profit by 262,7%, while revenues increased by 6.2% quarter-on-quarter. The cumulative year-to-date net result from continued operations was by 16.3% higher than achieved in the first three quarters of 2014. EBITDA was down 1.3% and operating profit slightly increased (by 0.5%) year on year. Revenues were by 1.2% higher in comparison to the first three quarters of last year.

All the above figures include the contribution of Rottneros AB (the majority of Rottneros AB was acquired by Arctic Paper Group in 2013), which posted very good financial results for both Q3 2015 and the first 9 months of 2015.

The Arctic Paper Group, excluding Rottneros, generated sales revenues of about PLN 541.9m in Q3 2015, which is 1.3% more than in Q3 2014. EBITDA was slightly over PLN 28m (a decline of 50.1% compared to the same period of 2014) and operating profit was almost PLN 8.9m (a 74.8% decrease year-on-year). Nevertheless, also in this case the Q3 2015 EBITDA and EBIT are much better than those of Q2 2015, when EBITDA was only PLN 151,000 and the company had an operating loss of over PLN 19.1m.

Arctic Paper CEO Wolfgang Lübbert commented: “The situation on the graphical paper market is still tough, with just very small signs of improvement. During the 3rd quarter the dollar impact and pulp prices remained the governing factors. Paper prices, which have been low for a long time, have slowly risen, but with reluctant market acceptance. The market situation strains the pace of reaching the full effect of our Profit Improvement Program, which includes the cease of production or sale of Arctic Paper Mochenwangen. The two alternatives are being carefully analysed to ensure progress and development of the three remaining Arctic Paper mills.”

The Group’s results in the paper segment were adversely affected by an increase in PLN pulp purchasing costs by 18.5% year-on-year (and 2.1% compared to Q2 2015). This situation remains unchanged and is caused mainly by the unfavourable euro to US dollar exchange rates, which were down by 16.1% compared to Q3 2014 (although slightly up, by 0.7%, compared to Q2 2015).

At the end of Q3 2015, the Arctic Paper Group kept a PLN 12.9m provision (out of PLN 15.3m created in Q1) motivated by the anticipated non-payment of trade receivables to Arctic Paper’s mills by PaperlinX UK companies, which were placed in voluntary administration.

In September 2015, the average prices of high-quality graphic paper in Europe were 5.3% higher for uncoated wood-free paper and 1.7% higher for coated wood-free paper (year-on-year). As compared to June 2015, these prices were up 2.6% for uncoated wood-free paper and 2.5% for coated wood-free paper (all data based on RISI).

The Group paper sales revenue in Q3 2015 was up 2.1% year-on-year and 9.1% in comparison to Q2 of this year. Sales revenue per tonne rose by 4.9% and 3.8% respectively.

Total Arctic Paper Group production volume in Q3 2015 was 189,000 tonnes, which is up 10,4% in comparison to Q2 2015 and down 4.1% compared to Q3 2014.

Arctic Paper CEO Wolfgang Lübbert summarized: “In unchanged conditions on the paper market we clearly see significant benefits from our majority ownership of Rottneros. This makes it easier to sustain and enforce the promotion of the outstanding products from our mills, and to implement our Profit Improvement Program.”

Further information for the media provided by:
Wolfgang Lübbert,CEO, Arctic Paper S.A.
Tel. (+49) 40 51 48 5310
wolfgang.luebbert@arcticpaper.com

Per Skoglund, COO, Arctic Paper S.A.
Tel. (+46) 31 63 1703
per.skoglund@arcticpaper.com

vendredi, 13 nov., 2015