Revenue and operating profit declined in the third quarter of 2016 relative to Q3 2015. The Q3 2016 performance was favourably affected by efficiency-improving measures in Europe, where we have subsequently accelerated the expansion of production capacity in order to accommodate growing demand. European retail packaging volumes were flat due to full capacity utilisation, while total packaging volumes were slightly down as a result of temporary volatility in North America and macroeconomic developments in South America. The capacity expansion programme in the Americas is proceeding according to plan. Full-year 2016 guidance is maintained.
CEO Ulrik Kolding Hartvig: "Our packaging volumes were slightly down in the third quarter, but we maintain our full-year guidance for 2016 and remain confident about our long-term prospects. European demand is growing and we are expanding capacity at several factories to be able to share in the expected market growth from 2017, building on the efficiency-improving measures that have already helped bolster our 2016 earnings. Our ongoing capacity expansion exercise in the Americas is driven by underlying demographic and social trends that are not affected by temporary market volatility in North America or macroeconomic developments in South America."
Q3 2016
- Revenue totalled DKK 482 million (2015: DKK 508 million), and operating profit* came to DKK 47 million (2015: DKK 52 million), corresponding to a profit margin* of 9.7% (2015: 10.2%).
- Our European business reported revenue of DKK 282 million (2015: DKK 292 million), while operating profit came to DKK 30 million (2015: DKK 25 million), corresponding to a profit margin of 10.6% (2015: 8.5%). Retail packaging volumes were flat, impacted by full capacity utilisation, and revenue also reflected lower average selling prices. The higher operating profit was caused by efficiency improvements and lower energy costs.
- Revenue from the Americas totalled DKK 200 million (2015: DKK 216 million), and operating profit came to DKK 29 million (2015: DKK 33 million), corresponding to a profit margin of 14.4% (2015: 15.2%). The performance was adversely affected by lower packaging volumes and higher production costs.
- Cash flows from operating activities were a net inflow of DKK 30 million (2015: DKK 39 million).
9M 2016
- Revenue totalled DKK 1,573 million (2015: DKK 1,570 million), and operating profit came to DKK 190 million (2015: DKK 156 million), corresponding to a profit margin of 12.0% (2015: 9.9%).
- The European business grew revenue to DKK 945 million (2015: DKK 900 million) and operating profit to DKK 114 million (2015: DKK 69 million), realising a profit margin of 12.0% (2015: 7.7%).
- Revenue from the Americas was DKK 629 million (2015: DKK 670 million), and operating profit came to DKK 103 million (2015: DKK 105 million), corresponding to a profit margin of 16.3% (2015: 15.7%).
- Cash flows from operating activities were a net inflow of DKK 167 million (2015: DKK 156 million), and the return on invested capital grew to 24% (2015: 23%).
Currency movements partly offset by inflation
- Currency fluctuations reduced revenue by DKK 19 million in the third quarter and by DKK 113 million in the first nine months of 2016, while trimming DKK 1 million and DKK 9 million off operating profit for the third quarter and the first nine months of 2016, respectively. Primarily related to the activities in South America, the currency effects were largely neutralised by inflation-induced price increases.
Outlook for 2016
- We maintain our full-year guidance of revenue in the DKK 2.1-2.2 billion range and a profit margin of 11-12.5%.
- Our total capital expenditure in 2016 is currently estimated at DKK 300-325 million, against the previous forecast of DKK 350 million.
For further information, please contact:
Ulrik Kolding Hartvig
CEO
Phone: (+45) 45 97 00 57
* Operating profit refers to operating profit before special items and profit margin to profit margin before special items, unless otherwise stated.