Mayr-Melnhof Karton AG — Earnings Release 2012

Aug 16, 2012

News Details

Corporate | 16 August 2012 08:00

Mayr-Melnhof Karton AG: Results for the first half-year 2012

Mayr-Melnhof Karton AG / Key word(s): Half Year Results/Half Year
Results

16.08.2012 / 08:00

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• Sales held up
• Non-recurring items weighed on solid results development
• High capacity utilization in the first half of the year - customers are
  however planning more cautiously
• Path of expansion continued

The Mayr-Melnhof Group completed the first half-year of 2012, as expected,
despite a solid development with a lower operating profit due to
non-recurring expenses resulting from the closure of the folding carton
plant in Liverpool. In the ongoing business, demand dynamics at the
beginning of the year were a short-time restocking effect of the supply
chain, followed by increased volatility and caution in our European core
markets. Due to the widespread geographic presence and the focus on
sustainable consumer goods, we were however in the position to maintain
capacity utilization at a high level both in cartonboard production and
processing during the first six months of the year. Nevertheless,
significantly intensified competition has not seen any sustainable support
on the procurement markets so far.

Against this background, we continue to pursue our objective of securing
margins by employing highest possible price discipline, cost efficiency and
flexibility. Ongoing operative optimizations create the basis for this.

In Latin America, expansion has been continued according to strategy by the
acquisition of an interest in the largest Columbian folding carton
manufacturer. In Europe, MM Packaging will put into operation the worldwide
most modern development center for packaging gravure at the German Trier
site by the beginning of September targeting on new growth opportunities.
In line with the dynamic expansion in Poland, a state-of-the-art folding
carton plant is currently built in Bydgoszcz, which will be commissioned in
January 2013 as MM's third packaging site in Poland.

Group Key indicators (IFRS, unaudited)
consolidated in millions of EUR 1HY/2012 1HY/2011 +/-
Sales 975.0 988.2 -1.3 %
Operating Profit 79.1 92.7 -14.7%
Operating margin (in %) 8.1 % 9.4 %
Profit before tax 71.9 88.8 -19.0%
Profit for the period 51.2 64.0 -20.0 %
Earnings per share (in EUR) 2.55 3.18

With EUR 975.0 million consolidated sales came in 1.3 % below the previous
year (1st half of 2011: EUR 988.2 million). An improvement in MM
Packaging's average sales prices was offset by a decline in MM Karton's
sales volumes.

Operating profit went down by approximately 14.7 % or EUR 13.6 million to
EUR 79.1 million, with about EUR 9 million thereof resulting from
non-recurring expenses related to the closure of the English packaging
plant in Liverpool. As a consequence of this one-off effect, the Group's
operating margin decreased from 9.4 % to 8.1 %.

Financial income was at EUR 1.5 million (1st half of 2011: EUR 2.1 million)
and financial expenses came in at EUR -3.0 million (1st half of 2011: EUR
-2.7 million).

Other income (expenses) amounted to EUR -5.7 million (1st half of 2011: EUR
-3.3 million) as a non-recurring expense of EUR 4.2 million resulting from
the increase in the interest in the Chilean folding carton manufacturer
Marinetti from 70 % to 100 % had to be accounted for.

Thus, the profit before tax reached EUR 71.9 million (1st half of 2011: EUR
88.8 million). Income tax expense amounted to EUR 20.7 million (1st half of
2011: EUR 24.8 million), leading to an effective tax rate of the Group of
28.8 % (1st half of 2011: 27.9 %).

In such, the profit for the period amounted to EUR 51.2 million (1st half
of 2011: EUR 64.0 million.

DEVELOPMENT IN THE SECOND QUARTER

Following the short-term acceleration in demand at the beginning of the
year, incoming orders during the second quarter were rather cautious, in
line with the economic slow-down in Europe. This was also manifested in a
significant increase in competition both in the cartonboard and the folding
carton business, whereas the procurement markets hardly gave indications of
softening.

By enhanced sales focus on non-European markets, MM Karton however managed
to maintain its capacity utilization at the level of the first quarter of
approximately 97 % (1Q 2012: 97 %; 2Q 2011: 99 %). Lower average prices and
higher input prices, especially for recovered paper, reduced the operating
margin to 5.5 % (1Q 2012: 7.2 %; 2Q 2011: 7.6 %).

With 8.9 % MM Packaging was able to maintain the operating margin both at
the level of the first quarter 2012 (8.8 %) and the second quarter 2011
(8.7 %) in spite of non-recurring expenses related to the closure of the
plant in Liverpool. Essential contribution was particularly provided by the
solid development in the cigarette packaging area.

Thus, the Group's operating profit reached EUR 37.0 million (1Q 2012: EUR
42.1 million, 2Q 2011: EUR 42.7 million), resulting in a Group operating
margin of 7.7 % (1Q 2012: 8.5 %; 2Q 2011: 8.7 %).

The profit for the period amounted to EUR 22.7 million (1Q 2012: EUR 28.5
million, 2Q 2011: EUR 28.6 million).

OUTLOOK

The general climate with recession indication in our main European sales
markets holds up. Conservative and short-term planning affects the demand
for cartonboard and folding cartons, while noticeable intensified
competition prevails in supply. Against this background, we rely on the
highest possible flexibility and cost efficiency in order to defend our
margins and market shares. Any softening of raw material prices currently
seems only of a short-term nature and will not offer any sustainable
support.

Therefore, we expect few changes in the course of business during the third
quarter. Our investment activities will be continued with the goal to
maintain and increase our competitiveness and growth potential. Our recent
expansion steps show a dynamic development and will be continued risk
consciously with a focus on future markets.

Please find our detailed Half-year Financial Report of 2012 on our website
http://www.mayr-melnhof.com.

For further information, please contact:
Stephan Sweerts-Sporck,
Investor Relations, Mayr-Melnhof Karton AG,
Brahmsplatz 6, A-1041 Vienna
Phone: +43 1 50136-91180,
Fax: +43 1 50136-91195
E-Mail: investor.relations@mm-karton.com
Website: http://www.mayr-melnhof.com

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Language: English
Company: Mayr-Melnhof Karton AG
Brahmsplatz 6
1040 Wien
Austria
Phone: 0043 1 501 36 91180
Fax: 0043 1 501 36 91391
E-mail: investor.relations@mm-karton.com
Internet: www.mayr-melnhof.com
ISIN: AT0000938204
WKN: 93820
Indices: ATX
Listed: Freiverkehr in Berlin, München, Stuttgart; Open Market in
Frankfurt; Wien (Amtlicher Handel / Official Market)

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181832 16.08.2012