Europac

EUROPAC INCREASES ITS NET PROFIT BY 53% AS OF SEPTEMBER

26/10/2016.-  Europac

​The Board of Directors of the Europac Group (Papeles y Cartones de Europa, SA) has approved the results for the third quarter of 2016. The company posted a net profit of 32 million euros between January and September, which represents a 53.1% rise on the 20.9 million euros posted in the same period of 2015.

  • ​Net profit amounts to a total of 32 million euros to September 2016, compared with 20.9 million euros posted in the first nine months of 2015
  • EBITDA for the period between January and September amounts to 89.9 million euros, 10.2% up on the figure for the same period last year
  • In the Packaging Division, EBITDA rose by 92% thanks to improvements in commercial and operational efficiency and the implementation of added value projects
  • In the Paper Division, noteworthy improvements were made to the management, which, combined with the market strength and the increase in the volume of production, offset the fluctuations in raw material and sales prices
  • There was a general increase in the results thanks to structural improvements as a result of internal management projects

​Moreover, against a backdrop of stable consolidated sales, the EBITDA rose to 89.9 million euros, representing a 10.2% rise on the 81.5 million posted a year ago. Accordingly, the EBITDA margin increase is noteworthy, standing at 14.9%, 1.4 percentage points above the 13.5% posted at the end of the third quarter of 2015. Lastly, the EBIT grew by 18.5% to stand at 53.9 million euros.

José Miguel Isidro, chief executive of the Europac Group, stressed that “the company's good results are due to structural improvements as a result of internal management projects of a commercial and operational nature”. Therefore, he added, “we have been able to reduce our exposure to the general environment and depend more on ourselves, enabling us to offer the market and our shareholders greater certainty in terms of meeting the strategic goals we have set”.

Greater profit margins

In terms of its individual business lines, the EBITDA of the Packaging Division amounted to a total of 15 million euros between January and September, which represents a 92.2% increase on the same period of 2015. The margin rose to 6.1% in the third quarter, well above the 2.4% posted in the same period of 2015. This is the result of improvement in internal management and the commitment to projects with a higher capacity for providing greater added value to the Group's results, such as packaging with high quality printing.

With regard to the Paper Division, the EBITDA amounted to 78.1 million euros to September 2016, which is slightly higher than the 77.7 million posted last year. This moderate rise is especially significant if we consider the drop in the sales price of Kraft paper and the increase in the cost of recycled paper, which have been offset by the rise in production volumes and improvement in management. This latter element contributed to the margin rising to 15.6%, higher than the 15.1% posted in the same period of 2015.

Investment recommendation

Out of the twelve analysts who regularly follow the company, ten have issued a buy recommendation. According to the market consensus, the average price of Europac stock is six euros per share, with a revaluation potential of 24% higher than today's opening market price. In this context, noteworthy is the attractive dividend paid out by the company to its shareholders.

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