Sequana presses ahead with Arjo restructure, posts strong H1 results


Sequana, owner of Arjowiggins and Antalis, has posted an 11% improvement in its first-half EBITDA despite difficult market conditions as it presses ahead with its financial and operational restructuring.

Group sales for the six months to 30 June 2014 rose 2.7% to €1.72bn (£1.37bn), while EBITDA increased 11% to €68m. Sequana reported a net loss of €80m (H1 2013: €36m loss) after recording exceptional costs of €77m, including restructuring costs of €66m.

Meanwhile, the key components of the group's debt restructure, including a €375m debt-for-equity swap that will more than halve consolidated net debt (from €730m to €355m) and last month's successful €66m rights issue, are well underway.

Sequana chairman and chief executive officer Pascal Lebard said: "Sequana’s successful recent rights issue will help strengthen Arjowiggins’ capital and, alongside its financial restructuring, will ensure the company has a healthy, viable long-term balance sheet and financing for its transformation plan. This plan will have a positive impact on the Group’s performance as from the second half of 2015."

Antalis reported a 4.7% rise in sales to €1.3bn thanks to the circa €125m contribution of Xerox's European office and digital papers business (acquired in November 2013), which offset the fall in printing and writing paper volumes and downward pressure on indent selling prices.

Antalis also reported "robust growth" in its Packaging and Visual Communications business, which helped lift the group's gross margin. EBITDA rose 4.3% to €39m, while recurring operating income moved up 7% to €26m.

Sister company Arjowiggins saw first-half sales slide 2.9% to €521m, chiefly due to the drop in printing and writing paper volumes, downward price pressure and negative currency impact (mainly due to the Brazilian real).

However, specialty businesses were said to have held up well, particularly recycled pulp and paper, banknotes and brand protection solutions, while the positive impact of a decrease in input costs (pulp, energy and chemical products) led to a 26.4% hike in EBITDA to €35m.

As part of its operational restructure, Arjowiggins has begun the process of selling its Charavines and Wizernes mills in France and its Appleton Coated mill in the US.

Sequana said that it expected the decline in printing and writing paper volumes to continue over the second half of the year but that it expected consolidated sales for the full year to be comparable with 2013 and EBITDA margin to "rise slightly" as the benefits of the decrease in overheads from the Ivybridge mill closure, together with the restructuring measures rolled out at Antalis and the contribution of the Xerox business are felt in full.

The group's share price rose to a high of €2.88 (previous close €2.60) following the results statement, before falling back to €2.64 at the time of writing.

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