Kotkamills Group Oyj
STOCK EXCHANGE RELEASE
28 February 2019, at 7:00 pm (CET + 1)
This is a summary of the January - December 2018 interim report. The complete report is attached to this release and is also available at www.kotkamills.com/fi/kotkamillsgroup/keyfinancials.
KOTKAMILLS INTERIM REPORT
October - December 2018 (10-12/2017)
The Group's revenue of EUR 85,0 million (EUR 79,3 million) improved by EUR 5,7 million from the same period a year ago mainly due to increased sales in the Consumer Boards segment.
The Group's EBITDA of EUR 7,7 million (EUR 23,7 million including EUR 22,6 million gain relating to disposal of Kotkamills Imprex Oy shares) decreased clearly from the same period a year ago due to a one-time effect (sales of Kotkamills Imprex Oy shares) in the comparison period.
Consumer Boards segment EBITDA of EUR 1,4 million (EUR -5,1 million) stayed at the previous quarter level but was clearly better compared to the same period a year ago due to increased sales prices and volumes.
Industrial Products segment EBITDA of EUR 4,7 million (EUR 6,2 million) decreased by EUR 1,5 million mainly due to lower delivery volumes compared to the same period a year ago.
Operating profit was EUR 3,6 million (EUR 16,7).
January- December 2018 (1-12/2017)
The Group's revenue of EUR 353,3 million (EUR 287,7 million) improved by EUR 65,6 million from the same period a year ago mainly due to increased Consumer Boards sales.
The Group's EBITDA was EUR 23,2 million (EUR 28,8 million including EUR 22,6 million gain relating to disposal of Kotkamills Imprex Oy shares) following the improved impact of Consumer Boards business.
Operating profit was EUR 7,1 million (EUR 5,7 million).
Events in October - December 2018
Delivery volumes in the Consumer Boards segment were clearly higher than a year ago, but on a lower level compared to the previous quarter mainly due to the seasonal decline in Q4/18.
Delivery volumes of both saturating base kraft and wood products in Industrial Products segment increased clearly compared to the previous quarter mainly due to maintenance shutdown in Q3/18. The demand continued on good level.
Key figures
(IFRS) 2018 2017 2018 2017
1.10.-31.12. 1.10.-31.12. 1.1.-31.12. 1.1.-31.12.
Group Total
Revenue, EUR million 85,0 79,3 353,3 287,7
EBITDA, EUR million 7,7 23,7 23,2 28,8
Operating profit, EUR million 3,6 16,7 7,1 5,7
Operating profit / Revenue (%) 4,2 21,1 2,0 2,0
Return on equity (%) -15,1 119,7 -46,3 7,0
Equity ratio (%) 5,9 8,8 5,9 8,8
Equity ratio, adjusted (%)* 60,4 58,2 60,4 58,2
*Equity including shareholder loans and the junior term loan
The Group monitors capital by using an adjusted equity ratio based on the financial covenant, which is total equity added with shareholder loans and the junior term loan divided by total assets (which shall be at least 30% in the end of each reporting period). The Group's policy is to keep the adjusted equity ratio above 30%. There have been no breaches of the financial covenant of adjusted equity ratio in the current period.
Events after reporting date
Kotkamills Group has produced Saturating Base Kraft ("SBK") in Tainionkoski Paper Machine 7 ("PM7") in Imatra leased from Stora Enso Oyj since the separation of Kotkamills from Stora Enso in 2010. The operations have been part of the Group's Industrial Products segment.
As earlier informed ((Stock Exchange release on the 3rd of July 2017) the leasing agreement concerning Tainionkoski PM7 was terminated in accordance with its terms in January 2019.
To serve its existing customers and to fulfill the needs arising from the increasing demand for SBK, Kotkamils is increasing the production capacity and product portfolio of Paper Machine 1 on Kotkamills' site in Kotka. In addition, Kotkamills has subcontracted production capacity for SBK.
Furthermore, the company will continue the earlier informed feasibility study for a possible investment to increase the production capacity of SBK with a new paper machine 3 (a "New PM3") in Kotka. The capacity, cost estimation and project schedule of the New PM3 will be published later on subject to the positive investment decision.
February 27th, 2019, Kotkamills has been announced as one of the winners in the global innovation initiative NextGen Cup Challenge, launched by the NextGen Consortium, aiming to develop the next generation of recyclable, compostable, hot and cold to-go, fiber cups. Fully recyclable, plastic-free and biodegradable The Game Changer cup - made of Kotkamills' ISLA® board - is one of the 12 awarded solutions that push the boundaries of sustainable design and material innovation. Company sees this recognition as a confirmation for its commitment to revolutionize paper cup production and recycling with its plastic-free next-generation barrier board solutions.
Near-term outlook
Revenue and profit of the first quarter in 2019 are estimated to be roughly at the same level as in the fourth quarter of 2018.
Demand of all business segments is expected to stay on a good level, but changes in the global economic situation and geopolitical risks may have weakening impact on demand.
Currency exchange rate changes and possible further increases in raw material prices could adversely impact the Group's profit development.
Kotkamills Group Oyj
Board of Directors
For additional information, please contact:
CFO Petri Hirvonen, tel.+358 40 571 0834, petri.hirvonen@kotkamills.com
DISTRIBUTION:
Nasdaq Helsinki Ltd
Key media
www.kotkamills.com
Kotkamills Group in brief
Kotkamills is a responsible partner that delivers renewable products and performance to its customers' processes via product innovations created from wood, a renewable raw material. One of the key brands of the company include Absorbex® an innovative laminating paper product for the laminate, plywood and construction industries. Moreover, Kotkamills offers ecological, technically sound and visually attractive wood products for demanding joinery and construction. In summer 2016, Kotkamills started up a new board machine producing AEGLE(TM) Folding Boxboard and ISLA(TM) Food Service Boards, including the capability to add barriers on-machine. All Consumer Board material solutions are fully recyclable and repulpable.
Kotkamills' production site is located in Kotka, Finland. The majority shareholder of Kotkamills is MB Funds, a Finnish private equity firm.
Disclaimer
The information contained in this release shall not constitute an offer to sell or the solicitation of an offer to buy securities of Kotkamills Group Oyj in any jurisdiction.