Mayr-Melnhof's Q1 profit up 27% year-over-year to 35.4M on 12.6% increase in sales to 494.7M; results influenced by higher selling prices, improved production, increased operating margin
May 12, 2011
– Results for the 1st quarter 2011
The supply chain is consistently well-stocked, hence the immediate challenge is to manage the continuous increases in costs.
The consolidated sales of the Group increased by 12.6 %, mainly due to higher average prices, and reached EUR 494.7 million (1Q 2010: EUR 439.2 million).
The operating profit increased by 24.4 % or EUR 9.8 million to EUR 50.0 million, primarily as a consequence of the improved result of cartonboard production. Accordingly the operating margin rose from 9.2 % (1Q 2010) to 10.1 %.
At EUR 48.5 million, profit before tax was 24.4 % higher than the previous year (1Q 2010: EUR 39.0 million). Income tax expense amounted to EUR 13.1 million (1Q 2010: EUR 11.2 million). Thus, the effective Group tax rate was 27.0 % (1Q 2010: 28.7 %).
Profit for the period therefore rose from EUR 27.8 million to EUR 35.4 million, representing an increase of 27.3 % compared to last year’s result.
Despite the fact that demand dynamics have gradually been reaching a normal level, an average order backlog of 135,000 tons (1Q 2010: 131,000 tons) ensured that our capacity utilization rate remained high at 98 % (4Q 2010: 98 %, 1Q 2010: 97 %). Due to the steep increase in costs of recovered paper, chemicals and transportation, the division remained particularly focused on maintaining its price discipline.
Sales rose accordingly by 10.7 % to reach EUR 243.4 million compared to EUR 219.9 million in the first quarter of 2010, even though the tonnage sold in the amount of 399,000 tons was 3.9 % below last year’s figure (1Q 2010: 415,000 tons). Thereof 81 % were sold within Europe and 19 % in non-European markets (1Q 2010: 79 %; 21 %).
The tonnage produced amounted to 390,000 tons, also representing a slight downturn of 3.5 % compared to last year’s figure (1Q 2010: 404,000 tons).
At EUR 24.3 million, the operating profit (1Q 2010: EUR 12.2 million) nearly doubled, and as a consequence, the operating margin went up to 10.0 % (1Q 2010: 5.5 %).
Modernization at the Kolicevo cartonboard mill in Slovenia
As forward planning, we decided to modernize the larger of the two cartonboard machines at the Kolicevo cartonboard mill in Slovenia, converting it into a “swing machine” to produce both recycled and virgin fiber-based cartonboard.
The conversion is planned for the final weeks of the year 2011 and will open up new market and profit opportunities as from early 2012. Investment expenditures will be more than EUR 40 million.
At MM Packaging, the first three months of 2011 were characterized by continuously strong order inflow and high capacity utilization at the folding carton plants. Sales in the Fast Moving Consumer Goods and Tobacco sectors proved to be particularly consistent.
The challenge of passing on the recent rise in cartonboard prices and the noticeable increase in other direct costs remains ongoing.
The tonnage processed reached 177,000 tons, growing by 4.1 % compared to last year’s figure (1Q 2010: 170,000 tons).
Sales rose by 12.7 % to EUR 281.2 million (1Q 2010: EUR 249.6 million) due to both volume and price factors, while almost half of this increase can be attributed to acquisitions made in the previous year.
As the significant increases in cartonboard prices could only be passed on gradually, the operating profit of EUR 25.7 million was 8.2 % below last year’s level (1Q 2010: EUR 28.0 million), and the operating margin decreased accordingly from 11.2 % (1Q 2010) to 9.1 %.