The most significant non-recurring item explaining the difference between consolidated and recurring EBITDA is the favourable judgement of the Supreme Court of Portugal on the dispute with Empresa de Desenvolvimento e Infraestruturas do Alqueva (EDIA), which led to extraordinary profit of 8.3 million euros.
The EBITDA margin rose by two percentage points to 15.8%, while EBIT amounted to 77.7 million euros, 24% up on the 62.5 million euros recorded in the previous year.
In the Paper Division, the increase in sales volume, the improvements in productivity and efficiency and the positioning in paper with higher added value, offset the fall in sales prices. With regard to the Packaging Division, results improved due to the fall in the price of the raw materials and operational and commercial improvements.
Finance costs fell by 37% in 2016 as a result of the management of the financial structure and cost optimisation following the first full year of application of the borrowing conditions of the new syndicated loan signed in July 2015, and the reduction in the volume of debt. Without taking into account the extraordinary positive effect of EDIA, the reduction in finance costs would have been 18%. Following the novation of the syndicated financing signed in December 2016, recurring finance costs are expected to fall by 2 million euros.
The Executive Chairman of the Europac Group, José Miguel Isidro, states that “these results confirm the trend for improvement recorded in the previous year and the positive development of our business in the context of an adverse market characterised by the fall in paper sales prices and the pressure on the price of the raw material”. With regard to operations, he pointed out that “the internal improvements recorded in 2015 and 2016 will continue over the coming years with the aim of fulfilling Europac’s commitment to its shareholders and achieving the strategic objectives defined for the 2015-2018 period”.
Strategic Objectives 2015-2018
Two years ago, Europac informed of its commitment to create shareholder value, which consisted in achieving an EBITDA margin of 16%, ROCE of 15% and a debt/EBITDA ratio of 2.0 times at year-end 2018. Two years later, the EBITDA margin and ROCE have grown by two percentage points to 15.8% and 11.7%, respectively, and the debt/EBITDA ratio stands at 2.0 times.
After paying an interim dividend drawn against the profit for 2016 of €0.095 per share, 79% up on the previous year, the Board of Directors agreed to submit to approval of the General Shareholders’ Meeting payment of a final dividend in order to achieve a pay-out of 60%, without this implying a change in the general policy of maintaining a pay-out of 50%. Furthermore, as supplementary shareholder remuneration, it will propose a bonus issue at a proportion of one new share for every 25 old shares.