Arctic Paper Group significantly improves financial results in 2014
The Arctic Paper Group generated significantly sounder financial results for 2014 than in the previous year. EBITDA was PLN 238.5m (growth of over 227%), operating profit exceeded PLN 116.6m (compared to a loss of PLN 151.6m the year before), and net profit was PLN 78.2m (compared to a loss of PLN 152.2m in 2013). Sales revenues in 2014 were PLN 3.1bn, similar to the amount in 2013.
The good financial results of 2014 were generated thanks to the introduction of reorganization measures and organizational efficiencies during the previous year. The results for 2014 were also influenced by favourable external factors such as pulp prices and currency exchange rates. The beginning of 2015 has proven that the volatility of the European currencies is a factor to be more aware of.
Excluding Rottneros, the Arctic Paper Group generated EBITDA in 2014 of PLN 146.1m (growth of 83.7%), an operating result of PLN 5 7.9m (compared to a loss the previous year) and net profit of PLN 21.3m (compared to a loss in 2013). Sales revenue in 2014 was PLN 2.4bn, or about 1.8% lower than in 2013. “Financially, all of our actions seek a single goal: stability”, said Wolfgang Lübbert, CEO of Arctic Paper. “Entering 2015 we have observed greater variability in exchange rates than in recent years. Such signals always demand our vigilance and care in taking decisions and our aim is to further reduce the ratio of net debt to EBITDA and to optimize working capital. The anticipated positive effects of the changes launched in mid-2013 to cut costs and optimize operations are clearly visible today. Our paper mill in Kostrzyn achieved record results at the level of production and sales, and the sales activity on Scandinavian markets gained a new, more efficient structure. We also centralized our logistics activity to improve the service level and effectiveness of the group.” As expected, the market environment in the 4th quarter of 2014 was volatile.
Market prices of paper continued to fall. Similarly to the previous years, December was seasonally the weakest period on the paper market, which influenced the 4th quarter financial results of Arctic Paper.
As of the end of 2014 prices of high-quality papers in Europe had declined from the price levels at the end of 2013. The fall in average prices from December 2013 to December 2014 was 1.2% for uncoated wood-free papers and 0.5% for coated wood-free papers (all data based on RISI).
Deliveries of high-quality papers on the European market in 2014 remained at a level very similar to 2013. In the segment of uncoated wood-free papers deliveries were up 1.0%, while in the segment of coated wood-free papers they were down 1.2% (all market data based on EuroGraph).
The volume of paper sales by the Arctic Paper Group in 2014 was 0.4% higher than the year before, while the usage of the production capacity of the Arctic Paper mills during this period was 93%. Compared to 2013, the average price of short- fibre pulp (BHKP) was down 5.8%, which is favourable to Arctic Paper. Meanwhile, the price of long-fibre pulp (NBSK) in 2014 was 7.9% higher than the year before, which in turn is advantageous for the results of Rottneros (data based on FOEX). Together with the more favorable exchange rates during 2014, the effect was positive for the result of the Arctic Paper Group. Arctic Paper CEO Wolfgang Lübbert concluded: “The situation on the paper market, although better than forecasted, remains complex. I am confident that our Stability and Mobility strategy, which we adopted in the autumn of 2013 and which delivered measurable effects in 2014, is the right path to follow in the current year as well.”