PRICES OF RAW MATERIAL CONTINUES TO RISE - LOWER VOLUMES
JANUARY - MARCH 2022
- Sales volume amounted to 4,941 tonnes (6,181 tonnes) a decline by 20%.
- Net sales amounted to SEK 226.7 (218.8) million, an increase by 4%. The organic increase was 1%.
- Operating profit amounted to SEK 11.4 (27.6) million, a decline by 59%. The adjusted operating profit amounted to SEK 11.4 (30.8) million, a decline by 63%.
- The operating margin declined to 5.0% (12.6%) and adjusted operating margin declined to 5.0% (14.1%).
- Profit for the period amounted to SEK 8.8 (21.9) million, a decline by 60%.
- Earnings per share before dilution amounted to SEK 0.44 (1.10), and after dilution, to SEK 0.42 (1.05).
- Net debt amounted to SEK 50.4 (48.4) million at the end of the period, 0.5 times (0.3 times) EBITDA.
- Equity/assets ratio was strengthened to 68.9% (66.4%).
PRICES OF RAW MATERIAL continues to rise - LOWER VOLUMES
Our view is that volumes have declined for the entire industry within Europe during the first quarter 2022, thus us maintaining our market share. The decline in volume is mainly a consequence of that the demand for pandemic related barrier products has slowed while demand for other application areas such as the travel industry and the automotive industry have not recovered. Throughout 2021, we had a turbulent raw material situation with sharply rising prices that almost doubled during the year. This trend has also unexpectedly continued during the first quarter of 2022, and the war in Ukraine has also hampered the market. In the situation with rising raw material prices and declining demand, price competition towards customers continued during the quarter.
Historically high raw material prices - weaker margins
Arla Plast's volumes decreased by 20 per cent and net sales increased by 4 per cent. Higher prices for raw materials as well as currencies had a positive impact on net sales. Gross margin declined to 15.2 percen (23.3) and the adjusted operating margin to 5.0 per cent (14.1). The first quarter in 2022 is compared with the equivalent quarter in 2021 which was a quarter strongly affected by the effect from the pandemic, i.e. a tough comparable quarter. The market shows an increasing price competition as a consequence from lower demand in combination with historically high prices for raw material. This has resulted in weaker gross margins. Higher energy prices as well as freight costs have also had a negative impact on margins.
As I informed in connection with my entry, we need to implement certain changes within the marketing and sales organization in order to take advantage of the organization and the full potential of our employees. During the quarter, we strengthened sales management and further changes will be made during the year. We have also strengthened Group Management with a new Operations Manager in Sweden.
We are in a challenging period with a market that has declined in relation to the tough comparable quarter of 2021 and with an unusually long and persistent high level of our raw material prices. The ongoing war in Ukraine is expected to indirectly affect us by continued higher prices for raw materials, for other input materials and freight costs. This, combined with a declining market where we normally work with a short horizon, means that the uncertainty remains high, although at the end of the quarter we can see effects after our internal improvement work. Our internal organization is used to being very flexible and I am convinced that we will meet and handle upcoming challenges and opportunities in the best way as we have shown many times before.
President and CEO
For further information, please contact:
Christian Krichau, CEO, +46 141 20 38 01
Monica Ljung, CFO, +46 141 20 38 02
Boel Sundvall, IR, +46 705 606018
Certain statements in this report are forward-looking and the actual outcome may be significantly different. In addition to the specific mentioned factors, other factors may have material impact on the actual outcome. Such factors include, but are not limited to, the general economic climate, exchange-rate fluctuations and changes in interest rates, political developments, the impact of competing products and the prices of such products, interruptions to the access to raw materials.
This information is such information that Arla Plast AB is obliged to publish in accordance with the EU Market Abuse Regulation.The information was published by the above mentioned contact persons on 11 May 2022 at 8:00 am CET.
about Arla Plast
Arla Plast is a producer and supplier of extruded sheets made of technical plastics. The plastic sheets are made of polycarbonate (PC), acrylonitrile butadiene styrene (ABS) and glycol-modified polyethylene terephthalate (PETG) and have a large number of areas of application, such as safety products, machine guards, ice hockey rinks, greenhouses, pool covers, sound walls, protective barriers (for COVID-19), suitcases, vehicle components and various construction-related areas of application. The company is headquartered in Borensberg, Sweden, and has production facilities in Borensberg and two in the Czech Republic. Arla Plast has around 260 employees and a turnover of more than SEK 900 million.
More information about Arla Plast is available at www.arlaplastgroup.com.