- • Profit margins heading for recovery following low point in 2005.
• Operational cash flow margin (EBITDA) rises from 9.2% to 11.5%.
• Strong investment programme should support continued growth.
Consolidated annual results year 2006 (EN+FR)
• Operational cash flow margin (EBITDA) rises from 9.2% to 11.5%.
• Strong investment programme should support continued growth.
1. Outlines
The business performance of the VPK Packaging Group was characterised by the partial recovery of profit margins in 2006. These margins increased steeply after the low point they reached in the previous year, although they did not achieve their historic average level.
The increase in profit margins in 2006 is mainly due to the rise in paper prices. This was caused firstly by increased demand and secondly by the measures to rectify overcapacity instigated by the paper manufacturers the previous year. The finished products (packaging) sector was also able to pass on the higher paper prices in its sales prices.
The operational cash flow (EBITDA) was €60.81m and the net profit was €26.37m.
The consolidated turnover rose 15.8% to €526.63m, mainly due to the growth of the corrugated board business in Poland and the UK and thanks to various takeovers realised by the “Tubes” business unit.
2. Consolidated key figures 2006
The business performance of the VPK Packaging Group was characterised by the partial recovery of profit margins in 2006. These margins increased steeply after the low point they reached in the previous year, although they did not achieve their historic average level.
The increase in profit margins in 2006 is mainly due to the rise in paper prices. This was caused firstly by increased demand and secondly by the measures to rectify overcapacity instigated by the paper manufacturers the previous year. The finished products (packaging) sector was also able to pass on the higher paper prices in its sales prices.
The operational cash flow (EBITDA) was €60.81m and the net profit was €26.37m.
The consolidated turnover rose 15.8% to €526.63m, mainly due to the growth of the corrugated board business in Poland and the UK and thanks to various takeovers realised by the “Tubes” business unit.
2. Consolidated key figures 2006
3. Notes
General:
An increase in consumer confidence in Europe resulted in higher use of consumer goods, which had a positive impact on the packaging market. This increased consumption coincided with the rectification of the overcapacity in the paper market, ensuring that supply and demand were brought more closely into line.
The various cost-saving measures being implemented within the various group companies both in Belgium and elsewhere were either successfully concluded or pursued further where necessary.
The integration of five tube businesses which have been acquired has been virtually carried through to a successful conclusion. All tube businesses are now united under the brand name COREX.
In Poland, a new corrugated board business was started up near Poznan in January 2006. From 2007, this company will follow the example of Rigid in Selby (UK) by making a positive contribution to the group’s results.
In Oudegem, a start was made on the €50m investment project for the conversion of paper machine 7 and the modernisation of the plant’s power generation. The goal is to improve product quality, raise productivity and reduce both the energy consumption and the environmental emissions per tonne of paper.
a) Turnover
The group’s turnover rose by 15.8% in 2006 to €526.63m.
b) Investments
In 2006, €30.4m was invested in intangible and tangible assets.
The intangible investments (€1.4m) mainly related to the ongoing implementation of an ERP system.
The investments in tangible assets mainly related to advances paid for the extension of paper machine 7 in Oudegem, as well as to a number of processing machines in the corrugated board departments in Belgium, the Netherlands, France and the UK.
c) Financial result
The financial result improved in 2006 to €-0.9m.
Shareholders’ equity (before profit distribution) increased to €244m, or 50.5% of the total assets, while the gearing ratio (net financial debts: shareholders’ equity) was 34.7%, thus remaining at a very healthy level which guarantees the maintenance of a strong financial structure.
d) Dividend proposal
The Board of Directors will propose to the General Meeting on 25 May 2007 that the gross dividend be increased by 15.7% to €0.59 per share.
Statutory auditor’s report
The statutory auditor, Grant Thornton, Lippens & Rabaey BVCV Belgian Member Firm of Grant Thornton International, represented by Mr Stefaan Rabaey, has confirmed that its audit activities, which have been substantially completed, have not revealed any significant corrections which need to be made to the accounting information included in this press release.
4. Discussion of main activities
Paper
In 2006 the group produced 420,000 tonnes, virtually the same as in 2005. Paper prices continued to rise in 2006 due to the closer alignment of supply and demand (see above).
Packaging
The demand for packaging is closely related to the state of the economy. The trend within Europe for the packaging industry to relocate to the countries of Central and Eastern Europe is continuing. VPK has reflected this trend with its strategy and has successfully brought a new corrugated board factory near Poznan (Poland) into operation.
Trade and services
VPK Packaging Group’s specialised trading activities, which target a number of niche markets, bore further fruit this year, with VPK continuing to achieve or consolidate a leading role as an ideal logistics partner.
5. Prospects for 2007
Expectations with regard to the economic climate in 2007 remain fairly positive in all the countries in which VPK Packaging Group is currently active. The management expects further raise of the consolidated turnover under these circumstances. The important conversion of a paper machine in Oudegem (an investment of €50m in October/November of 2007) results in temporary inactivity of this machine in question. Therefore, sales numbers for paper will decrease with 5%, which results in the failure to realise the related margins.
For the future, VPK Packaging Group intends to keep to its strategy as a service-oriented group, creating packaging solutions with increasing added value for its customers in economically prosperous regions of Europe. VPK Packaging Group will continue to focus on both internal and external growth. In terms of the latter, the new EU Member States remain a special focus of attention.
VPK Packaging Group’s strong financial structure and profitability remain considerable assets in this connection.
An investment budget of €60m has been proposed for 2007 to ensure VPK Packaging Group’s continued ability to meet its customers’ rising demands for service, quality and expansion.
6. Business profile
VPK Packaging Group, which is listed on Euronext Brussels, is a vertically integrated Belgian packaging group which specialises in the production of tailored packaging solutions. VPK Packaging Group controls the complete production process, from the collection of recycled paper via the production of paper through to the output of high-quality printed packaging. To this end, it has two paper factories, ten corrugated board factories and one solid board processing plant, located in Benelux, France, the UK and Poland. It also has ten tube businesses located in nine countries, and two trading companies which act as an ideal logistical partner.
VPK Packaging Group is a service organisation in which, in addition to the manufactured product, considerable attention is paid to customers’ specific needs under the name VPK Packaging Solutions®.
VPK Packaging Group has 2,800 employees.
7. Financial calendar
21 March 2007, 4 pm: Analysts’ meeting about annual results 2006
25 May 2007, 3 pm: Ordinary general meeting of shareholders (financial year 2006), preceded by an extraordinary general meeting
18 June 2007: Dividend for financial year 2006 becomes available for claim
30 August 2007: Press release and publication of results for first half of 2007
For additional information, contact:
Pierre MACHARIS, CEO
Luc LEDEGEN, investor relations
Tel.: +32 (0)52 26 12 08
E-mail: luc.ledegen@vpk.be
General:
An increase in consumer confidence in Europe resulted in higher use of consumer goods, which had a positive impact on the packaging market. This increased consumption coincided with the rectification of the overcapacity in the paper market, ensuring that supply and demand were brought more closely into line.
The various cost-saving measures being implemented within the various group companies both in Belgium and elsewhere were either successfully concluded or pursued further where necessary.
The integration of five tube businesses which have been acquired has been virtually carried through to a successful conclusion. All tube businesses are now united under the brand name COREX.
In Poland, a new corrugated board business was started up near Poznan in January 2006. From 2007, this company will follow the example of Rigid in Selby (UK) by making a positive contribution to the group’s results.
In Oudegem, a start was made on the €50m investment project for the conversion of paper machine 7 and the modernisation of the plant’s power generation. The goal is to improve product quality, raise productivity and reduce both the energy consumption and the environmental emissions per tonne of paper.
a) Turnover
The group’s turnover rose by 15.8% in 2006 to €526.63m.
b) Investments
In 2006, €30.4m was invested in intangible and tangible assets.
The intangible investments (€1.4m) mainly related to the ongoing implementation of an ERP system.
The investments in tangible assets mainly related to advances paid for the extension of paper machine 7 in Oudegem, as well as to a number of processing machines in the corrugated board departments in Belgium, the Netherlands, France and the UK.
c) Financial result
The financial result improved in 2006 to €-0.9m.
Shareholders’ equity (before profit distribution) increased to €244m, or 50.5% of the total assets, while the gearing ratio (net financial debts: shareholders’ equity) was 34.7%, thus remaining at a very healthy level which guarantees the maintenance of a strong financial structure.
d) Dividend proposal
The Board of Directors will propose to the General Meeting on 25 May 2007 that the gross dividend be increased by 15.7% to €0.59 per share.
Statutory auditor’s report
The statutory auditor, Grant Thornton, Lippens & Rabaey BVCV Belgian Member Firm of Grant Thornton International, represented by Mr Stefaan Rabaey, has confirmed that its audit activities, which have been substantially completed, have not revealed any significant corrections which need to be made to the accounting information included in this press release.
4. Discussion of main activities
Paper
In 2006 the group produced 420,000 tonnes, virtually the same as in 2005. Paper prices continued to rise in 2006 due to the closer alignment of supply and demand (see above).
Packaging
The demand for packaging is closely related to the state of the economy. The trend within Europe for the packaging industry to relocate to the countries of Central and Eastern Europe is continuing. VPK has reflected this trend with its strategy and has successfully brought a new corrugated board factory near Poznan (Poland) into operation.
Trade and services
VPK Packaging Group’s specialised trading activities, which target a number of niche markets, bore further fruit this year, with VPK continuing to achieve or consolidate a leading role as an ideal logistics partner.
5. Prospects for 2007
Expectations with regard to the economic climate in 2007 remain fairly positive in all the countries in which VPK Packaging Group is currently active. The management expects further raise of the consolidated turnover under these circumstances. The important conversion of a paper machine in Oudegem (an investment of €50m in October/November of 2007) results in temporary inactivity of this machine in question. Therefore, sales numbers for paper will decrease with 5%, which results in the failure to realise the related margins.
For the future, VPK Packaging Group intends to keep to its strategy as a service-oriented group, creating packaging solutions with increasing added value for its customers in economically prosperous regions of Europe. VPK Packaging Group will continue to focus on both internal and external growth. In terms of the latter, the new EU Member States remain a special focus of attention.
VPK Packaging Group’s strong financial structure and profitability remain considerable assets in this connection.
An investment budget of €60m has been proposed for 2007 to ensure VPK Packaging Group’s continued ability to meet its customers’ rising demands for service, quality and expansion.
6. Business profile
VPK Packaging Group, which is listed on Euronext Brussels, is a vertically integrated Belgian packaging group which specialises in the production of tailored packaging solutions. VPK Packaging Group controls the complete production process, from the collection of recycled paper via the production of paper through to the output of high-quality printed packaging. To this end, it has two paper factories, ten corrugated board factories and one solid board processing plant, located in Benelux, France, the UK and Poland. It also has ten tube businesses located in nine countries, and two trading companies which act as an ideal logistical partner.
VPK Packaging Group is a service organisation in which, in addition to the manufactured product, considerable attention is paid to customers’ specific needs under the name VPK Packaging Solutions®.
VPK Packaging Group has 2,800 employees.
7. Financial calendar
21 March 2007, 4 pm: Analysts’ meeting about annual results 2006
25 May 2007, 3 pm: Ordinary general meeting of shareholders (financial year 2006), preceded by an extraordinary general meeting
18 June 2007: Dividend for financial year 2006 becomes available for claim
30 August 2007: Press release and publication of results for first half of 2007
For additional information, contact:
Pierre MACHARIS, CEO
Luc LEDEGEN, investor relations
Tel.: +32 (0)52 26 12 08
E-mail: luc.ledegen@vpk.be
Last update: 19-04-2007
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