Boulogne-Billancourt, 25 October 2017
Operating results at end-September 2017
Given the changes to Arjowiggins' reporting structure in 2017 and in 2016, the operating results are commented on a restated data basis without the contribution of Arjowiggins Security BV and Arjowiggins Healthcare, sold in July 2017 and in June 2016, respectively.
- Pro forma sales down 2.6% to €2,113 million (down 1.2% at constant exchange rates)
- Pro forma EBITDA down 10% to €73 million; pro forma EBITDA margin down 0.3 points to 3.4%
- Pro forma current operating income up 3.9% to €50 million
| (€ millions) except
for per share data
|Jan – Sept 2017
pro forma (1)
|Jan – Sept 2016
|Change||Jan – Sept 2017 reported||Jan – Sept 2016 reported||Change|
|Sales||2,113.1||2,169.9||- 2.6%||2,132.1||2,232.4||- 4.5%|
|EBITDA (3)||72.8||80.9||- 10.0%||62.0||76.6||- 19.1%|
| EBITDA margin
(as % of sales)
|3.4%||3.7%||- 0.3 points||2.9%||3.4%||-0.5 points|
|Current operating income||50.3 (4)||48.4||+ 3.9%||40.6 (4)||43.6||- 6.9%|
| Operating margin
(as % of sales)
|2.4%||2.2%||+ 0.2 points||1.9%||2.0%||- 0.1 points|
(1) 9m 2017 pro forma data exclude the contribution of Arjowiggins Security BV (and its VHP banknote paper mill) which was sold in July 2017.
(2) 9m 2016 pro form figures also exclude this contribution as well as that of Arjowiggins Healthcare which was sold in June 2016.
(3) Recurring operating income before depreciation and amortisation and excluding movements in provisions.
(4) Includes a €2.3 million gain arising on a change to a pension plan carried on Antalis' books.
Consolidated pro forma sales for the first nine months of 2017 came in at €2,113 million, down 2.6% on 9 months 2016 at constant reporting structure for Arjowiggins (and down 1.2% at constant exchange rates).
In the third quarter - which traditionally witnesses lower sales and also included 1.3% less working days this year – Antalis' business varied by country with good performances in France and Eastern Europe but a slowdown in the UK. Business in the Packaging sector held up well and helped to partially offset the decline in Paper volumes. Arjowiggins benefited from resilient performances in the Graphic division specialty businesses which helped to partially offset the decline in fine paper volumes.
Pro forma EBITDA was €73 million versus €81 million for the first nine months of 2016 at constant reporting structure for Arjowiggins; pro forma EBITDA margin was down 0.3 points to 3.4%. This decrease mainly reflected a decline in Arjowiggins' operating performances which were hit by lower fine paper volumes and higher raw material costs (mainly pulp). Antalis' operating performances were close to those achieved in 2016 with a 0.1 point increase in EBITDA margin.
Pro forma current operating income grew by 3.9% to €50 million (including a €2 million gain arising on a change to a pension plan carried on Antalis' books). The pro forma current operating margin was 0.2 points higher at 2.4%.
In the fourth-quarter, trends in Antalis' businesses should be similar to those encountered during the first nine months of the year. Brexit-related uncertainty should continue to hit demand in the UK & Ireland which together contribute 26% of Antalis' sales.
For the year as a whole, Antalis should continue to reap the benefits of its margin protection policy, the growing contribution of the Packaging and Visual Communication sectors, and reduced overheads thanks to greater flexibility across its supply chain.
Excluding acquisitions and at constant exchange rates, Antalis' consolidated full-year sales should register a low single-digit decrease compared with the sales achieved for FY 2016 and EBITDA margin should come in at between 3.4% and 3.8%.
Antalis continues to actively study various different solutions to refinance its credit facilities which are secured through 31 December 2018.
Arjowiggins' business should remain at similar levels to those reported over the first nine months of the year, however performances will be impacted by the significant increase in raw material prices – partially offset by higher selling prices – and by the last-minute cancellation of a major order in the banknote paper segment.
The process to divest the Security division (i.e., Banknote business in France) is ongoing and the Group expects to receive the first expressions of interest in early November.
Sequana (Euronext Paris: SEQ) is a major player in the paper industry, boasting leading positions in each of its two businesses:
- Antalis: European leader in the distribution of paper and packaging products, with around 5,600 employees based in 43 countries.
- Arjowiggins: World leader in creative and technical papers, with approximately 2,800 employees.Sequana reported sales of €3 billion in 2016 and employed some 8,500 people worldwide.
- ANALYSIS BY BUSINESS
Jan – Sept 2017
pro forma (1)
Jan – Sept 2016
Jan – Sept 2017 reported
Jan – Sept 2016 reported
|Antalis||1,769.8||1,839.3||- 3.8%||1,769.8||1,839.3||- 3.8%|
|Arjowiggins||472.6||478.7||- 1.3%||491.6||541.2||- 9.2%|
|Eliminations and other||(129.3)||(148.1)||-||(129.3)||(148.1)||-|
|Total||2,113.1||2,169.9||- 2.6%||2,132.1||2,232.4||- 4.5%|
Antalis' sales came in at €1,770 million for the first nine months of the year, down 3.8% on 9m 2016 (and down 2.2% at constant exchange rates). The acquisitions completed in late 2016 added €19 million to 9m 2017 sales.
The Main European Geographies (UK & Ireland, France, Germany & Austria) delivered sales of €899 million, down 5.6% on 9m 2016 (and down 1.6% at constant exchange rates). This reflects the decline in Paper volumes, especially in the UK due to uncertainty over Brexit, and the depreciation in sterling over the period.
Sales for the Rest of Europe were down by 3.1% to €701 million. There was no material forex impact over the period.
Sales for the Rest of the World grew by 4.0% in the first nine months of the year to €170 million thanks to a favourable FX impact (on the rand, peso, and real). Excluding the forex impact, sales would be down 1.6% for the period.
Pro forma sales were €473 million for the first nine months of the year, down 1.3% on 9m 2016 sales at constant reporting structure (down 0.4% at constant exchange rates). This decline mainly reflects lower fine paper volumes, partially offset by resilient performances in the Graphic division specialty businesses.