Arctic Paper Group in Q1 2017: Satisfying results in the paper segment
Tuesday, 6 June 2017 256
In Q1 2017 the Arctic Paper Group generated sales revenue of PLN 773.9m. EBITDA was PLN 75.5m (an increase of 6.8% compared to Q1 2016), and operating profit exceeded PLN 44.1m (up 6.6%). The Group’s net profit on continuing operations* grew by 42% in Q1 2017, to PLN 35.1m.
The good results achieved by Arctic Paper in the paper segment should be stressed. The Group generated solid sales volumes, translating into an increased market share. Combined with the effects of the Profit Improvement Program 2015/2016, this led to achievement of robust operating results in this segment in Q1 2017. In the end of Q1 substantial pulp price increases were observed, impacting the financial results in the last month of the quarter.
Results in the paper segment (excluding Rottneros)
Sales revenues in the paper segment in Q1 2017 were over PLN 575m, down 2.5% compared to the same period of 2016. At the same time, the Group achieved very good operating results in this segment. EBITDA rose to over PLN 39m, a 26.8% increase y/y. Operating profit rose by 73.2% y/y, to almost PLN 18.8m, and the Group earned a net profit on continuing operations* of over PLN 17m, that is 11 times higher y/y.
In Q1 the market for fine graphical papers developed in two directions: while the uncoated market remained on a stable level (increasing by 0.2%), the coated market continued to decline, by 3.8% (compared to Q1 2016, according to EuroGraph data). During the same period Arctic Paper increased its sales by 1.8%, thus strengthening its position on the market.
The use of production capacity in Q1 2017 was 98%.
Per Skoglund, CEO of Arctic Paper, commented: “During the first quarter of 2017 the massive improvements of 2015/16 continued to prove their effectiveness. The good results of the period are solid proof of this, and combined with the new management structure this ensures that we are on the right track. The result was influenced by a number of factors, not least the volume of tonnes sold and our improved cost structure.”
Results including Rottneros
The results of Rottneros continued to be very solid in Q1 2017, in connection with an increase in the prices of the long-fibre pulp produced by Rottneros (NBSK) by 3.2% (compared to Q1 2016). In the historical perspective, profit and margins remained at a similar level.
It should be pointed out that production at Rottneros’s Vallvik mill in the beginning of Q2 was affected by an unplanned shutdown. The problem is now resolved and production is back to normal. The shutdown represents an estimated production loss of 4.5% of Rottneros’s total planned production for the quarter.
Sales revenue of the Arctic Paper Group in Q1 2017 fell slightly, by 0.6%, compared to Q1 2016. EBITDA was PLN 75.5m (+6.8% y/y), and operating profit was over PLN 44.1m. The operating profit on the Group’s continuing operations* rose by 42% from the previous year, to PLN 35.1m.
Per Skoglund added: “After a very good Q1, we will pursue efforts to gain continued long-term profitability relentlessly. In a market showing clear signals of cost increases in raw materials, we have to be constantly vigilant. To unceasingly adapt to these uncertain market conditions is our core competence, in production, product development as well as our market approach. The unplanned shutdown at the Rottneros Vallvik mill and its negative impact in the second quarter demonstrates the necessity of constant preparedness for the unexpected.”
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