Sequana looks to distribution-focused future

Antalis owner Sequana hinted at further acquisitions as it posted half-year results that were complicated by write-downs related to goodwill and disposals.

The group described the performance of Antalis as “resilient” in the six months to 30 June, “thanks to its capacity to pass on price increases in a context of falling volumes in the papers sector on the European market”.

Sales at Antalis were down 2.2%, (essentially flat at constant exchanges rates) to €1.18bn (£1.05bn).

The hit on foreign exchange, chiefly sterling and the Swiss franc, was €18m.

Antalis earnings before interest, taxes, depreciation and amortisation (EBITDA) fell by 15.9%, or 12.7% at constant exchange rates, to €36m.

Sequana said it expected Antalis to make EBITDA margins of between 3%-3.4% for the full year.

The group posted a €71.4m loss for the period that included €56m in write-downs related to historic goodwill at Antalis, along with €17m in refinancing and restructuring costs at that part of the business.

The loss on discontinued operations included €13m on the disposal of the banknote paper business.

Sequana sold its Arjowiggins Security papers business last year, and has since agreed to sell the €528m turnover Arjowiggins Graphic and Creative Papers businesses to Dutch firm Fineska, in a €125m deal.

The sale is expected to be completed during Q4 and includes eight paper mills including the Stoneywood mill in Scotland and the Chartham translucent papers mill in Kent. The disposal marks Sequana’s exit from industrial-scale paper making.

The Arjobex synthetic papers business has been retained. It is included in Sequana’s ‘other activities’ division, which includes Sequana overheads, where first-half sales were down 2.1% to €19.2m.

Acquisitions during the period included a Swedish packaging products distribution business and an agreement to buy a Romanian large-format media specialist.

Sequana said it was transforming it business model towards “more dynamic geographies” and is also in the process of selling its South African and Botswana subsidiaries to the local management team.

Further acquisitions appear likely. “Given the current context of declining volumes in the paper market, the distribution sector should undergo consolidation over the medium term and Antalis intends to leverage its leading position to continue playing an important role in this process,” the firm stated.

The group also provided an update on the long-running litigation with British American Tobacco (BAT) related to €578m in contested dividends. Appeal hearings took place at the Court of Appeal in London in June, with a decision expected in Q4.   

Earlier this month in France, the Court of Appeal of Versailles rescinded a previous decision made in June 2017 to terminate Sequana’s sauvegarde [temporary creditor protection] plan. Sequana said it was “assessing possible appeals and will file a new sauvegarde plan …within the three month deadline.”