These results, which include the non-recurring gain of 10 million euros from the sale of the packaging factory in Morocco, were achieved in a market context characterised by the increase in paper sales prices in response to strong final demand, which were weighed down by the volatility in the raw material price. The rise in the sales price of paper led in turn to an increase in the cost of the raw material for the Packaging Division.
The Group recorded a significant fall in finance costs of 80% compared with the first half of 2016 as a result of the improvement in financing conditions, financial asset management and the reduction in net debt, which at the end of June stood at 1.55 times EBITDA.
“Good end to the year”
José Miguel Isidro, executive chairman of Europac, highlights that “strong final demand will allow us to implement the latest announced sales price rises in paper and pass on to the market the rise in the packaging raw material. We therefore predict a good end to the year and we remain optimistic in a year in which we previously announced that we would record constant improvement and in which no further maintenance halts are expected”.
Performance of the business lines
The Paper Division recorded growth in sales of 7.3% and an increase in EBITDA of 10.8% to 59.5 million euros, with a margin of 16.5% thanks to the paper price rises in the context of an increase in the price of the raw material and the scheduled halts in the factories at Viana do Castelo (Portugal) and Rouen (Francia).
In the second half of the year, the Paper Division will continue working on improving its margin by means of operational and commercial optimisation projects, such as the geographical distribution of sales, the production mix, logistics costs and the reduction in specific consumption costs.
For its part, the Packaging Division recorded EBITDA of 3.3 million euros, 62% down on the first half of the previous year as a result of the increase in the price of the raw material. This was partially offset by an increase in the sales volume greater than that recorded by the market and the continuous cost reduction. In this context, the aim of the Packaging Division is to progressively pass on to the market the increase in raw material costs and to continue developing added value projects in order to recover margins.
In addition to the acquisition of the packaging factory in Lucena (Córdoba) and the waste management centre in Laguna de Duero (Valladolid), and the sale of the logistics operator at the port of Viana do Castelo, in June the Group sold the packaging factory in Tangier, in response to the worsening market conditions in Morocco and Europac’s desire to continue growing and strengthening its positioning in Spanish packaging and waste management markets without increasing its debt.