Antalis reports on difficult first half

Jo Francis
Monday, September 30, 2019

Antalis has described its first half performance as “resilient” in the face of declining overall demand for paper and supply issues caused by events at the Arjowiggins paper mills. However, one-off costs have resulted in increased losses for the period.

The group is the biggest distributor of paper, packaging, and sign and display materials outside of the USA. It has been working to establish a new shareholder structure since February, and its majority shareholder Sequana went into liquidation in May

Antalis said the search for a new shareholding structure, with support from Goldman Sachs, continued and was “proceeding in line with the plan”.

The group’s results for the six months to 30 June were in line with its preliminary figures announced in July. Turnover fell by 5.4% to €1.072bn (£950m) on a like-for-like basis, while EBITDA was down by nearly 10% at €30.1m (2018: €36m).

The Papers business suffered a sharp decline in sales of 7.6% to €714.1m, growth at its Packaging business was described as “weak” with sales nudging up 0.3% to €254.2m, while Visual Communications was “stable” with sales down 2.4% at €103.9m.

The bottom-line loss for the period increased from €16m to €27m, with one-off costs including a €10.2m asset writedown mainly related to goodwill at its Latin American business, and restructuring costs of €9.8m. The group also implemented accounting standard IFRS 16 for the first time, which resulted in a further €3m hit to the figures.  

Sales in the UK and Ireland slipped by 5.6% to €282m, with Antalis describing market conditions as “difficult… notably due to Brexit” although the UK did better than the general market contraction.

Chief executive Hervé Poncin said: “In H1 2019, the group’s operating performance was impacted by the decline in volumes of Papers in a market that contracted by around 7%, and by the bankruptcy of one of our graphic and recycled papers suppliers.

“Against this backdrop, we have continued to adapt our structure to changing patterns of demand and we have significantly reduced our overheads, particularly our logistics and marketing costs.”

Arjowiggins Graphic had supplied around 4% of the group’s purchases, in value terms.

Antalis stated that it had complied with its banking covenants and had strengthened its liquidity with an amended factoring agreement. This has increased its facility from €215m to €290m through the inclusion of an additional finance partner.

Net debt fell by 4.1% to €318m, although under IFRS 16 the net debt figure increases to €434m.

Sales at the group’s Papers division are expected to continue to decline, although it expected a better second half now the situation at Arjowiggins Creative Papers in the UK had been successfully resolved.

“In H2 2019, Antalis should benefit from the launch of new ranges of recycled products and the relaunch of Arjowiggins Creative Papers ranges following its management buyout. Packaging and Visual Communication should show resilience over the coming months and continue to grow their contribution to the Group’s consolidated gross margin,” the group stated.

It anticipates that full year sales will be down by between 6%-7%, with EBITDA margin of 2.7%-2.9%.

Antalis shares fell by 14% to €0.90 after the announcement. 

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