Arjowiggins owner Sequana's H1 net income up 50% year-over-year to €36M, net sales up 1.3% to €2B on price hikes despite volumes decrease

PARIS , July 22, 2011 (press release) –

  • Sales stable at €2,010 million (+1.3% in pro forma)
  • EBITDA at €87 million compared to €111 million at 30 June 2010 pro forma, or a margin of 4.3% (-1.3 points)
    • Increase in Antalis earnings thanks to controlled fixed costs and selling prices increases
    • Significant decline in Arjowiggins earnings due to increased input costs
  • Positive net income at €35 million versus €6 million in 2010
The Board of Directors of Sequana, chaired by Mr. Tiberto Ruy Brandolini d'Adda, met in Paris on 21 July 2011 and examined and approved the financial statements for first half 2011.

Consolidated sales increased 1.3% to €2,010 million in first half 2011 compared to pro forma first half 2010 (up 0.7% at constant exchange rates). This growth comes from selling price increases implemented in 2010, which offset the marked decrease in volumes during the first half.

EBITDA reached €87 million, down 21% compared to pro forma first half 2010.

This decrease is mainly related to the increase in raw materials and energy (impact of around €50 million compared to first half 2010), particularly pulp and waste paper, which continued to have high price levels, much greater than in first half 2010, as well as cotton (used in banknote papers production/Security division), with a price that nearly tripled between September 2010 and March 2011. Recurring operating income reached €71 million (including a €17 million exceptional actuarial gain related to a plan amendment of a British pension fund) compared to €74 million in pro forma first half 2010. This represents a recurring operating margin of 3.5% of sales (-0.2 points).

Recurring net income amounted to €36 million compared to €24 million in pro forma first half 2010, particularly given the improvement in financial income. After extraordinary items (mainly the capital gain from the sale of Antalis Office Supplies activities), net income attributable to owners amounted to €35 million compared to €6 million in first half 2010.

Consolidated net debt at 30 June 2011 totalled €642 million compared to €674 million at 31 December 2010 and €670 million at 30 June 2010. This €32 million decrease compared to 31 December 2010 takes into account the proceeds from disposals over the period for €98 million, partially offset by the increased working capital requirement related to seasonality.

Commenting on the group’s first half performance, Sequana’s Chief Executive Officer Pascal Lebard said:

"In the first half of the year, our business activity suffered from particularly difficult market conditions with a more significant decline in volumes than expected and strong pressure on raw material costs. However, we were able to contain the decline in our earnings thanks to the positive effect of our selling price increases implemented in 2010, the control of our fixed costs, and the contribution of growing and value added market segments. We also continued our strategy to gradually refocus on distribution, in which we are the leader in Europe with Antalis, by participating in the consolidation of the paper sector with the effective sale of the Arjowiggins Decor and Abrasives activities to Swedish group Munksjö."


After a difficult first half, the group anticipates a gradual improvement in market conditions. In the second half, it expects a slighter decrease in demand than in first half, with a more favourable basis of comparison, and a softening in raw materials prices, particularly pulp prices, which are expected to start decreasing at the beginning of the second half. Given the selling price increases announced for the second half and the fixed cost cutting measures already undertaken, Antalis should continue to improve its performance and Arjowiggins should turn its earnings around in the second half.

In this context, Sequana expects its operating performance (EBITDA) in 2011 to be close to 2010.

About Sequana

Sequana (NYSE Euronext Paris: SEQ) is a major player in the paper industry, boasting leading positions in each of its two businesses: ␣ Antalis: Number 1 in the distribution of papers and packaging products in Europe. Present in 53 countries,

Antalis has 6,200 employees. ␣ Arjowiggins:Worldleaderincreativeandtechnicalpapers,withmorethan5,400employees.

Sequana reported sales of €4 billion in pro forma 2010 and employed some 12,000 people worldwide.

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