RenoDeMedici swings to loss of €1.5M in first nine months of 2011 from profit of €1.6M in year-ago period, reports negative effects of financial markets in Q3; sales up 7.6% to €394.8M on increased prices
November 4, 2011
– Consolidated Financial Results as at 30 September 2011 (Vs. 3 Q 2010):
• NET REVENUES: EURO 394.8 MILLION (euro 366.8 million as at 30 September 2010)
• GROSS OPERATING PROFIT (EBITDA): EURO 24.8 MILLION (euro 28.0 million as at 30 September 2010)
• OPERATING PROFIT (EBIT): EURO 5.1 MILLION (euro 8.5 million as at 30 September 2010)
• NET PROFIT (LOSS) OF THE PERIOD: EURO (1.5) MILLION (euro 1.6 million as at 30 September 2010)
• NET FINANCIAL INDEBTEDNESS: EURO 105.2 MILLION (euro 106.5 million as at 31 December 2011)
,The Board of Directors of Reno De Medici S.p.A. (“RDM” or the “Company”), parent company of one of the world’s largest producers of recycled cardboard, met today under the chairmanship of Mr. Christian Dube and approved the Interim financial report for the period ended September 30th, 2011 of the Reno De Medici Group (“RDM Group” or the “Group”).
Following two very positive quarters, in the third quarter the Reno De Medici Group felt the negative effects of the turbulence on the financial markets, and that of Europe in particular, which is having repercussions on the real economy.
After weakening in the second quarter, as already noted, order flow in the third quarter was affected by an appreciable deterioration in the overall macroeconomic situation.
High levels of stocks and the uncertainties hanging over the immediate future have also led to a sharp slowdown in the demand for coated cartonboard, with destocking clearly taking place. At a European level there was a fall of 2.6% in demand in the first nine months of 2011 over the same period in 2010, with a drop of over 8% in the third quarter compared to the second quarter. The negative trend in Europe was partially contained by increases in sales on overseas markets.
Main consolidated results
The Group’s production in the period reached 675 thousand tonnes compared to 692 thousand tonnes for the same period in 2010; the fall is entirely attributable to the third quarter, due to stoppages at certain factories. In terms of volumes sold, 684 thousand tonnes were despatched compared to 701 thousand tons in 2010.
The Reno De Medici Group earned revenues of Euro 395 million in the first nine months of 2011, representing a rise of 8% over the same period in 2010, essentially due to the increase in prices introduced in 2010 and at the beginning of 2011, in turn caused by the constant rise in the cost of raw materials. EBITDA fell from Euro 28 million in the first nine months of 2010 to Euro 24.8 million in the corresponding period in 2011. This comparison reflects the peculiarity of the third quarter of 2010, which was exceptionally positive due amongst other things to the over-procurement policies followed by customers, in contrast to the opposing trend seen in the third quarter of 2011 which, as said, was penalised by destocking. Profitability in the quarter also felt the effect of stoppages at certain factories. There was a net loss of Euro 1.5 million for the period, with the result also being affected by the write-down of investments.
The Group as at September 30, 2011 made capital expenditures of Euro 18.9 million (Euro 11.4 million at 30 September 2010).
Outlook for operations
The outlook for operations for the remainder of the year is expected to be in line with the negative trend seen in the third quarter, due to the persisting weakness of the economy, the specific difficulties being encountered by certain countries, the drop in consumption and the disruption still characterising the financial markets.
The specific critical features of the industry relate above all the extent to which volumes will hold up: the uncertainty about the immediate future could in fact reduce the tendency of households to spend, with the resulting continuation of the destocking process. In this situation Reno De Medici will work to safeguard industrial efficiency and profitability, adjusting production levels to real demand.
It is expected that there will be a fall in the cost of production factors during the rest of the year, in particular in that of raw material mixture. Energy costs should remain at their present high levels in the short term.
Mr. Stefano Moccagatta, the officer in charge of drafting the Company’s accounting documents, declares pursuant to Art. 154–bis, sub-section 2, of Italian Decree Law 58/1998 (“Consolidated Law on Financial Intermediation”) that the information contained in this press release corresponds to documentary results and to accounting books and records.
In addition to the financial indicators conventionally required by IFRS, this press release also presents a few alternate performance indicators (for example, EBITDA) to provide better assessment of the economic-financial performance trend. These indicators are calculated according to normal market practices.
This document is an English translation from Italian. The Italian original shall prevail in case of difference in interpretation and/or factual errors.
The Consolidated Financial Results for the period ended 30 September 2011 will be available to the public at the Company’s registered office at Via Durini n. 16/18, Milan, Italy and at Borsa Italiana, in the terms and conditions required by law. Copies can be obtained. Such documents are also consultable on the website: www.Renodemedici.it.