Helsinki, Finland, 2014-07-23 12:55 CEST (GLOBE NEWSWIRE) --
MUNKSJÖ OYJ, INTERIM REPORT, 23 JULY AT 12:55 PM CEST
Munksjö Oyj's Interim Report for January-June 2014 - Positive profitability trend continued
Highlights of the second quarter 2014
- Net sales were EUR 292.5 (208.0) million. The substantial increase in net sales was primarily due to the business combination between Munksjö AB and Ahlstrom Corporation’s business area Label and Processing completed in 2013.
- Adjusted EBITDA was EUR 26.0 (16.5) million and the adjusted EBITDA margin was 8.9% (7.9%).
- Operating result adjusted for non-recurring items was EUR 13.4 (8.3) million. Non-recurring items amounted to EUR -0.6 (-27.6) million.
- Operating result was EUR 12.8 (-19.3) million and net result EUR 4.1 (-22.0) million.
Highlights of January-June 2014
- Net sales were EUR 580.4 (362.5) million. The substantial increase in net sales was primarily due to the business combination between Munksjö AB and Ahlstrom Corporation’s business area Label and Processing completed in 2013.
- Adjusted EBITDA was EUR 53.4 (28.0) million and the adjusted EBITDA margin was 9.2% (7.7%).
- Operating result adjusted for non-recurring items was EUR 27.1 (13.3) million. Non-recurring items amounted to EUR -1.6 (-30.6) million.
- Operating result was EUR 25.5 (-17.3) million and net result EUR 8.4 (-23.9) million.
- Earnings per share (EPS) were EUR 0.16 (-1.38).
- Interest-bearing net debt at the end of the reporting period was EUR 241.5 million (30 June 2014: 268.2; 31 Dec 2013: 229.3), equivalent to a gearing of 56.5% (30 June 2013: 68.9%; 31 Dec 2013: 54.1%).
- Operating cash flow was EUR 8.3 (5.2) million.
| KEY FIGURES (MEUR) | Apr-Jun | Jan-Jun | Jan-Dec | ||
| 2014 | 2013 | 2014 | 2013 | 2013 | |
| Net sales | 292.5 | 208.0 | 580.4 | 362.5 | 863.3 |
| EBITDA (adj.*) | 26.0 | 16.5 | 53.4 | 28.0 | 55.0 |
| EBITDA margin, % (adj.*) | 8.9 | 7.9 | 9.2 | 7.7 | 6.4 |
| EBITDA | 25.4 | -11.1 | 51.8 | -2.6 | 5.9 |
| EBITDA margin, % | 8.7 | -5.3 | 8.9 | -0.7 | 0.7 |
| Operating result (adj.*) | 13.4 | 8.3 | 27.1 | 13.3 | 15.7 |
| Operating margin, % (adj.*) | 4.6 | 4.0 | 4.7 | 3.7 | 1.8 |
| Operating result | 12.8 | -19.3 | 25.5 | -17.3 | -33.4 |
| Operating margin, % | 4.4 | -9.3 | 4.4 | -4.8 | -3.9 |
| Net result | 4.1 | -22.0 | 8.4 | -23.9 | -57.4 |
| Earnings per share (EPS), EUR | 0.07 | -0.98 | 0.16 | -1.38 | -1.97 |
| Interest-bearing net debt** | 241.5 | 268.2 | 241.5 | 268.2 | 229.3 |
|
* Adjusted for non-recurring items ** Restated to reflect the adoption of IFRS 11 as explained in the notes to the interim report |
|||||
Unless otherwise indicated, the figures in parentheses refer to the figures for the equivalent period in 2013. This interim report is unaudited. It is published in Swedish, Finnish and English. In case of any discrepancies between the three versions, the Swedish text shall prevail.
Comment from Munksjö’s President and CEO, Jan Åström
“The efforts to achieve the synergy benefits related to the business combination of Munksjö AB and Ahlstrom Corporation’s speciality paper division have now reached the final stage. Of the expected annual synergy benefits of EUR 20 to 25 million, we have at the end of the second quarter achieved an annual run-rate of approximately EUR 23 million. As further synergies are expected during the second half of 2014, the total benefits will reach around EUR 25 million by the end of the year. As a result, it will be possible to disband the project team responsible for monitoring the integration efforts and synergy benefits already at the end of the current year after a successful completion of the task. I am extremely pleased and proud to note that the mission has been accomplished ahead of schedule and that we have achieved results that meet our expectations.
From a business point of view, the quarter was characterised by stable prices and a solid order intake. I would like to highlight two business areas. Firstly, Graphics and Packaging continued to improve its margins.. The results are consistent with our plans, and an agreement has been reached with the trade unions on personnel reductions. The full impact of these measures will be realised in the fourth quarter. Graphics and Packaging’s objective for the second half of the year is to achieve an EBITDA margin exceeding five per cent during months when there are no scheduled maintenance shutdowns. Secondly, Industrial Applications continued to improve its profitability for another quarter.
In the first six months of 2014, cash flow has been affected by approximately EUR 14 million of prior provisions and non-recurring costs. We have also increased our working capital, primarily inventories, to ensure the service level during scheduled vacation shutdowns. As a result of that we expect a clear improvement of cash flow in the second half of the year.
I wish to commend all the employees who continue to deliver results that meet or exceed the ambitious goals we have set for the company!”
Outlook
The demand for Munksjö’s products is expected to remain stable during the third quarter of 2014, after relatively strong first six months. Prices in local currency are expected to remain at the same level as in the second quarter. An improvement of cash flow is expected in the second half of the year.
The annual synergy benefits related to the combination are expected to reach the upper level of the previously communicated target level of EUR 20-25 million. Further initiatives have started and are planned in order to reach the financial goal of 12 per cent EBITDA margin over a business cycle.
The annual vacation shutdowns, during which planned maintenance operations are scheduled, are expected to be carried out to the same extent as in 2013, with the exception of the business area Graphics and Packaging. The shutdowns in this business area’s two production facilities will be extended by approximately one week due to paper machine upgrades.
Forming a global leader in specialty paper – combining Munksjö AB with Ahlstrom Corporation’s business area Label and Processing
Munksjö Oyj was formed when the Swedish company Munksjö AB and the business area Label and Processing of the Finnish company Ahlstrom Corporation were combined. The company consists of four business areas: Decor, Release Liners, Industrial Applications and Graphics and Packaging. The business areas are also the reporting segments.
In addition to the financial result for the reporting period, the report contains pro forma financial information of the business combination. As the combination was completed during 2013, pro forma information is only prepared up until the fourth quarter 2013. This information is presented for illustrative purposes only. Further information on how the pro forma information was compiled is available in the Financial Statements Bulletin, published on 13 February 2014.
Synergy benefits and integration
The annual synergy benefits arising from the business combination are estimated to be at the upper end of the previously communicated target level of EUR 20-25 million. The result for the second quarter of 2014 includes realised synergies of approximately EUR 5.5 million. At the end of the second quarter the annual synergy benefits run-rate was approximately EUR 23 million.
The synergies have been achieved primarily within procurement and improved efficiency within the organisation. The remaining synergies are expected mainly in the business area Graphics and Packaging.
Non-recurring items to achieve the synergy benefits are still estimated at EUR 10-15 million. In addition to the EUR 11 million recorded in the result of 2013, costs of EUR 0.5 million were recorded during the first quarter of 2014. No synergy related non-recurring items were recorded during the second quarter of 2014. The cash flow effect was EUR 4.0 million in 2013, EUR 1.5 million in the first quarter and EUR 1.0 million in the second quarter of 2014.
The Munksjö Group
| Apr-Jun | Jan-Jun | Jan-Dec | ACQUIRED OPERATIONS | 27 May-Jun | 27 May-Dec | |||||
| MEUR | 2014 | 2013 | 2014 | 2013 | 2013 | MEUR | 2013 | 2013 | ||
| Reported 1) | Reported 1) | |||||||||
| Net sales | 292.5 | 208.0 | 580.4 | 362.5 | 863.3 | Net sales | 46.9 | 257.0 | ||
| EBITDA (adj.*) | 26.0 | 16.5 | 53.4 | 28.0 | 55.0 | EBITDA (adj.*) | 2.3 | 6.9 | ||
| EBITDA margin, % (adj.*) | 8.9 | 7.9 | 9.2 | 7.7 | 6.4 | EBITDA margin, % (adj.*) | 4.9 | 2.7 | ||
| EBITDA | 25.4 | -11.1 | 51.8 | -2.6 | 5.9 | EBITDA | 0.1 | -3.5 | ||
| EBITDA, margin % | 8.7 | -5.3 | 8.9 | -0.7 | 0.7 | EBITDA, margin % | 0.2 | -1.4 | ||
| Operating result (adj.*) | 13.4 | 8.3 | 27.1 | 13.3 | 15.7 | Operating result (adj.*) | 0.6 | -4.9 | ||
| Operating margin, % (adj.*) | 4.6 | 4.0 | 4.7 | 3.7 | 1.8 | Operating margin, % (adj.*) | 1.3 | -1.9 | ||
| Operating result | 12.8 | -19.3 | 25.5 | -17.3 | -33.4 | Operating result | -1.5 | -15.3 | ||
| Operating margin, % | 4.4 | -9.3 | 4.4 | -4.8 | -3.9 | Operating margin, % | -3.2 | -6.0 | ||
| Net result | 4.1 | -22.0 | 8.4 | -23.9 | -57.4 | Delivery volumes, tonnes | 41,000 | 223,400 | ||
| Capital expenditure | 8.6 | 4.6 | 14.1 | 6.8 | 22.6 | |||||
| Employees, FTE | 2,770 | 1,970 | 2,770 | 1,814 | 2,216 | |||||
| Pro forma 2) | ||||||||||
| Net sales | 292.5 | 299.6 | 580.4 | 590.0 | 1,120.3 | |||||
| EBITDA** (adj.*) | 26.0 | 16.3 | 53.4 | 35.2 | 64.1 | |||||
| EBITDA** margin, % (adj.*) | 8.9 | 5.4 | 9.2 | 6.0 | 5.7 | |||||
| EBITDA** | 25.4 | 13.3 | 51.8 | 31.5 | 42.3 | |||||
| EBITDA**, margin % | 8.7 | 4.4 | 8.9 | 5.3 | 3.8 | |||||
| Delivery volumes, tonnes | 228,400 | 231,100 | 454,000 | 458,100 | 885,300 | |||||
* Adjusted for non-recurring items
** Includes stand-alone cost savings and synergies obtained after 27 May 2013
1) Includes LP Europe from 27 May 2013 and Coated Specialties from 2 December 2013
2) Includes LP Europe and Coated Specialties from 1 January 2012. As the combination was completed during 2013, the pro forma information is only consolidated until the fourth quarter 2013. From the first quarter 2014 the reported figure is used.
Reported
Second quarter 2014
Net sales were EUR 292.5 (208.0) million. The substantial improvement in net sales was primarily due to the business combination completed in 2013.
EBITDA adjusted for non-recurring items increased to EUR 26.0 (16.5) million andthe adjusted EBITDA margin was 8.9% (7.9%).
Operating result adjusted for non-recurring items was EUR 13.4 (8.3) million and the adjusted operating margin 4.5% (4.0%). Non-recurring items amounted to EUR -0.6 (-27.6) million and were costs for the work in connection with the Statement of Objections from the European Commission.
The operating result was EUR 12.8 (-19.3) million and net result EUR 4.1 (-22.0) million.
January–June 2014
Net sales were EUR 580.4 (362.5) million. The substantial improvement in net sales was primarily due to the business combination completed in 2013.
EBITDA adjusted for non-recurring items increased to EUR 53.4 (28.0) million andthe adjusted EBITDA margin was 9.2% (7.7%).
Operating result adjusted for non-recurring items was EUR 27.1 (13.3) million and the adjusted operating margin 4.7% (3.7%). Non-recurring items amounted to EUR -1.6 (-30.6) million. Of these costs, EUR 1.1 million were related to the work in connection with the Statement of Objections by the European Commission and EUR 0.5 million to the efforts to achieve synergy benefits.
The operating result was EUR 25.5 (-17.3) million and net result EUR 8.4 (-23.9) million.
Reported figures compared to pro forma figures
Second quarter 2014
Net sales were EUR 292.5 (299.6) million.
EBITDA increased to EUR 26.0 (16.3) million and the adjusted EBITDA margin was 8.9% (5.4%).
January–June 2014
Net sales were EUR 580.4 (590.0) million.
EBITDA adjusted for non-recurring items increased to EUR 53.4 (35.2) million while the adjusted EBITDA margin was 9.2% (6.0%). The result for the first quarter of 2013 included a non-recurring item with a positive impact of around EUR 3 million which was due to the release of certain accruals related to personnel liabilities.
Webcast and conference call
A combined news conference, conference call and live webcast for investors, analysts and media will be arranged on the publishing day 23 July 2014 at 3:00 pm CEST (4:00 pm EEST, 2:00 pm UK time) at the corporate head office in Stockholm (Klarabergsviadukten 70, elevator D, 5th floor). The report will be presented by President and CEO Jan Åström. The event will be held in English.
The conference call and live webcast can be followed on the Internet and an on-demand version of the webcast will be available on the same webpage later the same day. To join the conference call, participants are requested to dial one of the numbers above 5-10 minutes prior to the start of the event.
Webcast and conference call information
Finnish callers: +358 (0)9 2313 9201
Swedish callers: +46 (0)8 5052 0110
US callers: +1 334 323 6201
UK callers: +44 (0)20 7162 0077
Conference ID: 945742
Link to the webcast: http://qsb.webcast.fi/m/munksjo/munksjo_2014_0723_q2/
For further information, please contact
Jan Åström, President and CEO, Tel. +46 10 250 1001
Kim Henriksson, CFO, Tel. +46 10 250 1015
Munksjö – Materials for innovative product design
The Munksjö Group is an international specialty paper company with a unique product offering for a large number of industrial applications and consumer-driven products. Founded in 1862, Munksjö is among the leading producers in the world of high-value added papers within attractive market segments such as Decor paper, Release Liners, Electrotechnical paper, Abrasive backings and Interleaving paper for steel. Given Munksjö’s global presence and way of integrating with its customers’ operations, the company forms a global service organisation with approximately 3,000 employees. Production facilities are located in France, Sweden, Germany, Italy, Spain, Brazil and China. Munksjö Oyj is listed on NASDAQ OMX Helsinki. Read more at www.munksjo.com.
