Antalis owner hit by weak demand and prices as losses quadruple
Friday, July 26, 2013
Sequana, the French paper group that owns Arjowiggins and Antalis, has reported a sales slump of 9% in the first half of 2013, citing a "sharp decline in demand for printing papers in Europe".
Group sales to 30 June fell €178m (£153m) from €1,977 last year to €1,799m in 2013, with net losses increasing four-fold year-on-year to -€36m, from -€9m in 2012.
While the group admitted that, as a result of its poor first-half performance, sales and profits this full year would be down on 2012, it said it hoped that its results for the second half of the year would not be as weak as H1.
Sales at merchanting operation Antalis fell €106m from €1.36bn in the first half of 2012 to €1.26bn this year, while revenues at manufacturing division Arjowiggins dropped €84m to €661.
Earnings before interest, tax, depreciation and amortisation (EBITDA) at Antalis tumbled 14.6% to €38m, although in a statement Sequana said that performance varied "considerably" across countries and the UK was singled out as one of the more resilient markets.
According to Sequana, downward price pressure and the fact that the market for printing papers shrank by 8% were the key drivers behind struggling sales at Antalis. However, the company described Antalis’ proposed acquisition of Xerox’s Western European office paper business, which is expected to close in Q4, as a means to "consolidate its market position and increase its profitably".
Volumes at Arjowiggins also slipped 8%, with added price pressure contributing to sales sliding 11.2%, and EBITDA almost halving from €44m in the first half of 2012 to €25m in the same period this year.
Arjo’s Graphic division across Europe was hardest hit, with sales falling €42m to €262m and EBITDA crashing by more than 90% to €1m from €12m last year.
Sequana said the manufacturing operation had benefited from two mill closures this year, and it expected the planned closure of its Ivybridge mill in the UK early next year to help further.
Sequana chairman and chief executive Pascal Lebard said: "The deteriorating business environment during the first six months of 2013 accelerated the drop in volumes of printing papers in Europe against a backdrop of strong downward pressure on selling prices and amplified the shift to mid-range papers. Consequently, we continued to press ahead with our rigorous cost-management policy.
"Consolidated net debt has fallen by €60m since 30 June 2012. This also reflects the capital increase carried out last year, part of which was used to enable Antalis to pursue its external growth strategy and to implement restructuring operations during H2 2012 at Arjowiggins."
The company also confirmed that it had renegotiated agreements with its banks to extend its credit facilities at Arjo and Antalis, €400m and €530m respectively, to November 2015.