- Further profit growth
- High capacity utilization in both divisions
- Significant margin increase at MM Karton
- Costs weigh on profit at MM Packaging
The Mayr-Melnhof Group was able to carry forward the positive development since the beginning of the year with a strong second quarter and therefore to conclude the first half-year of 2018 significantly above the previous year.
In a balanced market environment both divisions recorded continuing high capacity utilization. The operating profit of the Group rose by around 12 % compared to the previous year's period. Drivers derived from the cartonboard division, which benefited in particular from higher average prices. The packaging division was able to grow further, however a sharp rise in input costs, especially for cartonboard, weighed on the result. Necessary price increases are difficult to implement.
Despite a sound capacity utilization of the facilities sustaining the high earnings level will be a challenge for the second half of the year.
Group Key indicators (IFRS, unaudited)
Consolidated, in millions of EUR 1st HY/2018 1st HY/2017 +/-
Sales 1,170.6 1,150.3 +1.8 %
Operating Profit 114.3 102.1 +11.9 %
Operating margin (in %) 9.8 % 8.9 %
Profit before tax 111.8 97.0 +15.3 %
Profit for the period 83.7 71.9 +16.4 %
Earnings per share (in EUR) 4.17 3.58
The Group's consolidated sales increased by 1.8 % from EUR 1,150.3 million to EUR 1,170.6 million, with both divisions contributing.
At EUR 114.3 million, the operating profit was EUR 12.2 million or 11.9 % above the previous year's value (1st half of 2017: EUR 102.1 million). A considerable profit increase at the cartonboard division contrasted with a decline at the packaging division. The Group's operating margin reached 9.8 %, after 8.9 % in the first six months of 2017.
Financial income amounted to EUR 0.6 million (1st half of 2017: EUR 1.3 million), financial expenses to EUR -3.0 million (1st half of 2017: EUR -2.9 million).
"Other financial result - net" decreased to EUR -0.1 million after a one-off expenditure due to an accumulated currency translation of EUR 2.3 million was reported in the previous year following the deconsolidation of the Tunisian packaging companies.
Profit before tax went up accordingly by 15.3 % to EUR 111.8 million (1st half of 2017: EUR 97.0 million). Income tax expense totaled EUR 28.1 million, following EUR 25.1 million in the first half of the previous year. The effective Group tax rate of 25.1 % (1st half of 2017: 25.9 %) remained largely unchanged. At EUR 83.7 million, the profit for the period was up 16.4 % compared to the previous year's figure (1st half of 2017: EUR 71.9 million). This corresponds to 7.2 %(1st half of 2017: 6.3 %) of sales.
DEVELOPMENT IN THE SECOND QUARTER
Both sales and operating profit in the second quarter were above the previous year's level. Compared with the first quarter of the current year, a slight profit improvement could also be achieved, but with marginally lower sales.
At 99 % (1Q 2018: 99 %; 2Q 2017: 99 %) the cartonboard division reported continuing full capacity utilization and achieved with improved prices and costs a very good operating margin of 10.6 % (1Q 2018: 10.3 %; 2Q 2017: 7.3 %).
In the packaging division, higher volume and sales could only partially offset the significant increase in material costs, with the operating margin at 8.6 % arriving above the first quarter of the current year (8.3 %), but below the previous year's value (2Q 2017: 9.8 %).
The Group's operating profit reached EUR 57.2 million, after EUR 57.1 million in the first quarter of 2018 and EUR 51.5 million in the second quarter of the previous year. The Group's operating margin accordingly rose to 9.9 % (1Q 2018: 9.6 %; 2Q 2017: 9.1 %). The profit for the period went up to EUR 42.0 million (1Q 2018: EUR 41.7 million; 2Q 2017: EUR 35.0 million).
Demand on our European main markets remains balanced, however without any fresh impulses. We therefore anticipate continuing high capacity utilization in both divisions, but also increasingly intense competition. Owing to the general cost pressure, our focus remains on a consequent price policy and further rationalization in order to maintain the quality of the Group's results. At the same time, structural improvements in the product portfolio and the strategic alignment of our plants will be further pursued, with ongoing investment activity following the long-term average. Maintaining the high profitability of the first half-year in the second half of the year is both goal and a challenge at the same time. High emphasis remains on the continuation of our long-term growth course.
Please find the detailed Press Release and the Half-Year Financial Report 2018 as well as the CEO video presentation and the details for today's CEO Conference Call on our website: www.mayr-melnhof.com.
November 15, 2018 Results for the first three quarters of 2018
For further information, please contact:
Mayr-Melnhof Karton AG
Tel.: +43 1 501 36-91180
Fax: +43 1 501 36-191195
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