Sequana swings to 2011 net loss of €77M from profit of €32M in year-ago period primarily on impairment, restructuring charges; net sales down 1.8% to €3.9B with reduced volumes partially offset by price increases

PARIS , March 9, 2012 (press release) – Renewal of the existing credit facilities agreed in principle, securing the Group’s financial structure through to 30 June 2014

  • Sales held firm at €3,944 million (down 1.8% on a pro forma basis*)
  • EBITDA reached €135 million, down from €206 million in 2010 (pro forma*), as a consequence of sharply reduced demand and high raw material prices. EBITDA margin is 3.4% (down 1.7 points)
    • Antalis: EBITDA held solid at €101 million, down from €110 million in 2010 (pro forma*). EBITDA margin is 3.7% (down 0.2 points)
    • Arjowiggins: EBITDA at €50 million, down from €112 million in 2010 (pro forma*). EBITDA margin is 3.4% (down 4.1 points)
  • Net loss of €77 million after net non-recurring expenses of €108 million
  • The Board will recommend to the shareholders at their Annual General Meeting that no dividend be paid for 2011
The Board of Directors of Sequana, chaired by Tiberto Ruy Brandolini d’Adda, met in Paris on 8 March 2012. It examined and approved the financial statements for 2011 and the agenda and draft resolutions for the forthcoming Annual General Meeting.

Commenting on the year’s performance, Sequana’s Chief Executive Officer Pascal Lebard said: “In 2011, our Group was squeezed by sharply reduced volumes in the printing and writing papers segment and very high input costs (pulp, cotton, waste paper, chemical products, energy). This weighed heavily on our results, particularly on the production side of the business at Arjowiggins. However, Antalis’ distribution business held up well despite the fraught market conditions. An agreement in principle has been obtained to renew our existing credit facilities through to 30 June 2014 on favourable terms given the current business environment.”

Consolidated sales for the year slipped by just 1.8% (pro forma) to €3,944 million (down 1.4% at constant exchange rates), despite the sharply reduced volumes for printing and writing papers on both the distribution (down 8%) and production (down 7%) sides of the business. This slight fall in value terms reflects the positive impact in first-half 2011 of price increases implemented in 2010, healthy demand for banknote paper and good growth in Antalis’ non-paper businesses.

EBITDA came in at €135 million, down 34.5% year-on-year (pro forma), mainly due to much higher raw material and energy prices than in 2010 (negative impact of €62 million on Arjowiggins’ earnings for 2011). The EBITDA margin was 3.4% (down 1.7 points).

Recurring operating income, including gains of €25 million arising on changes to pension plans (mainly in the UK), dropped by €46 million or 33.9% (pro forma) to €89 million, and included a €17 million actuarial gain arising on changes in a UK pension fund. The operating margin was 2.3%, down by 1 point on 2010.

Recurring net income was €30 million, a 41.2% drop on the €51 million recorded in 2010. Including net non-recurring expenses of €108 million (mainly €61 million in impairment taken against Arjowiggins’ assets and €38 million in restructuring costs), the net loss attributable to owners was €77 million, equivalent to a diluted loss per share of €1.57.

Consolidated net debt declined by €65 million over the period, to €609 million at 31 December 2011, compared to €674 million at 31 December 2010. This decrease was due to the favourable €96 million impact from the sale of Arjowiggins Decor and Abrasives activities and Antalis Office Supplies.

The consolidated financial statements have been audited and the audit report is to be issued shortly.
  • Renewal of credit facilities agreed in principle
On 24 February 2012, the Group signed an agreement in principle with its banks setting out the terms and conditions for the renewal of its financing lines until 30 June 2014. The Board of Directors is satisfied that the essential conditions required for the definitive agreements to be signed are met. In view of the above, the consolidated financial statements were approved by the Board of Directors based on the going concern accounting principle. The complete legal documentation for the financing lines should be finalised by the end of April 2012.
  • Dividend At the Annual General Meeting of shareholders, Sequana’s Board of Directors will recommend not paying any dividend for 2011.

Given the prevailing economic and financial uncertainty, demand for printing and writing papers should continue to decline in 2012, particularly in the first half of the year. Actual figures for the first two months of the year for both distribution and production confirm this outlook, as the lack of visibility hits corporate marketing and communication budgets.

Arjowiggins’ specialty businesses (particularly eco-friendly papers, Security and Medical/Hospital segments) should benefit from robust demand. On the distribution side, growth in Packaging and Visual Communications and in emerging markets should continue apace. In this respect, Antalis has stepped up its development on the packaging market, acquiring Ambassador in the UK and Pack 2000 in Germany at the beginning of 2012 for a total enterprise value of €26 million.

Raw material prices should fall compared to 2011 despite continuing volatility in the business environment. This has already happened with prices for pulp – aside from a moderate increase expected in March – and waste paper and cotton prices. However, prices for energy and chemical products will remain at high levels.

Certain players have announced price increases for April in the printing and writing paper segments.

Antalis should be able to offset declining volumes thanks to the roll-out of its RACE 2012 programme and continued growth in Packaging and Visual Communications sectors. Arjowiggins should be able to leverage the positive impact of lower raw material prices to improve its operating performance.

Consequently, Sequana expects to deliver in 2012 an operating performance (EBITDA) ahead of 2011.


In 2011, Antalis had to contend with sharply reduced demand for printing and writing papers in Europe. Strict management of customer risk exacerbated the decline and resulted in a slight loss of market share in Europe. Demand was healthy in non-paper businesses (Packaging and Visual Communications) and in markets outside Europe.

Despite the sharp 8% drop in volumes, sales were down just 1.4% on 2010 (pro forma), to €2,759 million (down 1.6% at constant exchange rates), which reflected the favourable impact of the selling price increases implemented in 2010 and 2011.

EBITDA came in at €101 million, down 8.1% on 2010 (pro forma). Antalis managed to limit the EBITDA decline thanks to the combined impacts of selling price increases implemented in 2010 and 2011, a proactive gross margin protection policy, an improved product mix due to the growing contribution of the Packaging and Visual Communications businesses, and a tight rein on overheads.

Recurring operating income (including gains of €8 million arising on pension plans) amounted to €83 million, a decline of 3.4% on 2010 (pro forma), while the operating margin remained stable at 3.0%.

Antalis continued to deploy its RACE 2012 business transformation programme which is advancing in line with objectives. It also refocused on its core business with the sale of its retail and wholesale Office Supplies activities in Spain and Portugal for an enterprise value of €26 million.

Antalis’ acquisition of Ambassador in the UK and Pack 2000 in Germany gives it additional annual sales of around €50 million and makes it the UK’s second-largest distributor of packaging products and solutions.


2011 saw a sharp drop in demand for graphic papers used in the printing and writing segments in Europe and the US, particularly in the second half of the year. Consequently, the selling price increases announced before the summer by all industry players and scheduled for the second half of 2011 could not be implemented. Specialty businesses performed well overall, particularly the Security business (banknotes, security solutions), spurred by robust demand.

Volumes declined by 7% over the year and sales slipped 1.6% on 2010 (pro forma), to €1,465 million (down 0.3% at constant exchange rates).

EBITDA fell to €50 million, down from €112 million in 2010 (pro forma). Besides the adverse impact of declining volumes, Arjowiggins also had to contend with much higher raw material prices than in 2010, particularly pulp, cotton (used to produce banknote paper), waste paper, latex and starch. Over the year as a whole, higher raw material and energy costs had a negative €62 million impact on earnings.

Recurring operating income came in at €22 million (including a gain of €17 million arising on a pension plan in the UK), down €44 million on 2010 (pro forma), including a €17 million actuarial gain arising on pension funds.

Faced with a very tough market environment, Arjowiggins continued to reduce overheads and to adjust its production capacity to the changing demand. Three paper machines were shut, in France, Denmark and Argentina. In addition, Arjowiggins sold its Decor and Abrasives business to Swedish group Munksjö in March 2011 and its Moulin du Roy mill to French group Hamelin in June 2011, for a total enterprise value of €99 million.

Industry Intelligence Editor's Note: In an omitted table, Sequana recorded 2010 net income of €32 million.

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