Six Sigma Module 2: Cost of Poor Quality - Learn More Now!

2007-08-21 Manufacturing News Source

Web www.jobwerx.com jobwerx.tradepub.com

Constantia Packaging AG 2007 quarterly report

The Constantia Packaging Group took advantage of the first-half economic growth in 2007 reporting an increase of just over thirty percent in sales.

The global economy is expected to record further gains in 2007, with the Asian economies continuing to play the role of growth driver. The euro zone’s economic growth will also outpace that of the United States, thereby providing an additional boost to Austria’s domestic economy. Austria’s central bank and the Austrian Institute of Economic Research (Wifo) are forecasting 3.2% economic growth. The Eastern European countries of the European Union are expected to record 5.5% growth, again above the EU average.

In June, the European Central Bank raised its key interest rate by 25 basis points to 4.0%. Inflation currently stands at 2.0%, and is expected to fall back to around 1.7% at year-end. Job growth is expected to accelerate further, but will have little impact on the European unemployment rate, which is only expected to decline from 4.4% to 4.3% by end-2007.

Constantia Packaging expanded its portfolio
Both companies acquired in early 2007 – Constantia Hueck Folien, Germany (consolidated effective January 1, 2007) and Novis, Romania (consolidated effective March 1, 2007) – made positive earnings contributions.

Constantia Hueck Folien is a leading European producer of high-quality packaging for pharmaceuticals and food. The company has production sites in Germany, Belgium, the United States and Uruguay. Novis is the Romanian market leader for paper labels for the beer and soft drinks industry.

From their initial consolidation through June 30, 2007, the newly acquired companies contributed a total of €93.2 million to sales and €8.5 million to EBITDA. Together with its partner Arla Foods, Constantia Packaging AG is currently reviewing its joint venture in Danapak Flexibles Group (Denmark). This review is part of a routine business portfolio analysis. After a five-year partnership, both joint venture partners are examining all options in conjunction with the management of Danapak Flexibles, namely to see which form and ownership structure the company should have in the future.

Continued commodity price pressures
The Constantia Packaging Group’s most essential commodities include aluminum, plastic, paper, paint, varnish and corrugated board base paper. In the first half of 2007, commodity prices rose sharply, in particular for paper and crude oil. Corrugated board base paper prices rose by around 15%. Meanwhile, the 3-month price of aluminum on the London Metal Exchange (LME) eased by a modest 2.5% to USD 2.725 per metric ton as of June 30.

We do not expect these commodity prices to ease significantly during the remainder of the year; in fact, we are forecasting further increases. The corrugated board base paper segment implemented a roughly 5.0% price increase in July. Further increases have been announced for the fourth quarter.

Constantia Packaging Group took advantage of a favorable economy
The Constantia Packaging Group took advantage of the first-half economic growth in 2007. Sales in both segments totaled €680.4 million, a substantial increase of 30.5% (€159.1 million) from the previous year’s level of €521.3 million.

This increase was due on the one hand to the recent acquisitions of Constantia Hueck Folien and Constantia Novis, which have already been successfully integrated into the Group. On the other hand the Group’s existing companies also recorded satisfactory sales gains. Organic sales rose by 12.6% to €65.9 million. Operating earnings also advanced. EBITDA rose by 32.3% from €70.4 million to €93.2 million, while EBIT increased by 31.5% from €45.2 million to €59.5 million. Excluding the two newly acquired companies, EBITDA rose by 20.2% to €14.2 million and EBIT increased by 21.9% to €9.9 million.

The positive operating results of the existing and acquired companies offset the negative impact on earnings related to company integrations and rising commodity prices. Also, the Flexible Packaging segment achieved substantial reductions in materials consumption through process optimizations.

Flexible Packaging records double-digit growth
In the first half, the markets of the Constantia Flexibles segment trended in line with the overall economy. Meanwhile, the integration of the newly acquired companies Constantia Hueck Folien and Constantia Novis proceeded according to schedule. Both companies delivered the expected positive earnings contributions.

Duropack Group sales increase
The Duropack Group’s market environment in the first half was characterized by strong growth on the one hand and massive commodity price pressure on the other. The Group largely overcame this pressure.

In markets with highly vertically integrated competition, passing on higher commodity prices to consumers is very difficult. Given existing fixed price agreements, it can take between three and six months to implement price increases. In spite of this challenging market environment, the Duropack Group used a variety of measures including cost controls, productivity enhancements and product innovations to boost sales by 12.0%. Overall, they rose from €141.1 million to €158.1 million.

Constantia Packaging stock price posts steady gains
Global equity markets continued to rise in the first half of 2007. The Vienna Stock Exchange Index (WBI) advanced by 8.1% from 1,706.08 points at the beginning of the year to 1,844.51 points as of June 30. Constantia Packaging’s stock substantially outperformed the index, gaining 43.8% from €37.20 at the beginning of the year to €53.50 at June 30.

Recent events
On July 6, a share purchase agreement was signed to acquire the 40% equity interest held by Klaus Hammerer in Austria Metall AG (AMAG). On the same day, Constantia Packaging AG also acquired a further 12.06% AMAG equity interest previously held by the AMAG employee foundation.

AMAG’s new ownership structure now consists of Constantia Packaging AG (73.45%), Constantia Packaging B.V., Netherlands (16.55%) and AMAG Employee Foundation (10.0%). The transaction closing, and in particular approval from the competition authorities, is expected in the second half of 2007.

The acquisition of a majority interest in AMAG helps us to diversify our business portfolio and secures a supply of raw materials. The company is Austria’s leading producer of extruded and cast aluminum products (with 2006 annual sales of €830 million, excluding the extrusion business, which was not acquired), and has been a key, long-term supplier of rolled aluminum strip to Constantia Flexibles.

Full-year outlook remains optimistic
At present, no major change is on the horizon that could significantly affect Constantia Packaging AG’s sales or procurement over the remainder of this year. Nevertheless, the recent capital market correction is a clear reminder that a negative trend shift cannot be entirely ruled out in the near term.

By continuing our strict cost control, the expansion of our service business and the development of innovative products, we expect to maintain our business activities at least at the current levels in the second half. The acquisition of a majority stake in AMAG represents a milestone in our company’s growth. Following the closing, we will have another stand-alone “Aluminum” business segment.

In the past, we have repeatedly demonstrated our capacity to integrate previously independent companies into our Group and thereby create new perspectives and growth opportunities for both sides. We will continue to work on mastering these challenges together with all of our employees, who are the cornerstone of our success and deserve our special thanks.

Constantia Packaging AG is a publicly listed Austrian holding company that invests in medium-sized industrial and related services companies. Constantia Packaging AG’s stock is listed on the Prime Market of the Vienna Stock Exchange.

Big enough to dare, small enough to dare Constantia Packaging Group is big enough to offer a wide range of products and services to multinational customers in the food and beverage, pharmaceutical, alcohol, tobacco and automotive industries.

Constantia Packaging Group acquires majority interest in Romanian market leader for paper labels for the brewing and soft drink industry. The merger of AMAG and Constantia Packaging AG creates a substantially larger group, with more than 8,500 employees worldwide and sales of more than €2 billion.

Constantia Packaging AG has owned a 25% + 1 share equity interest in Austria Metall AG (AMAG), Ranshofen, since May 2004, and has been in negotiations with Klaus Hammerer GmbH since August 2006 to acquire its 40% equity interest in AMAG.

A framework agreement concluded on March 23, 2007 paved the way for signing in Vienna, July 6, 2007, of a share purchase agreement as well as a concurrent agreement to transfer AMAG’s extrusion business, which generated sales of approximately €155 million in 2006, to the Hammerer family by a de-merger of AMAG.

The business purpose of Constantia Packaging AG (1010 Vienna, Opernring 17, Vienna Commercial Registry number FN 88214b) and its subsidiaries is mainly the production and sale of packaging products made from aluminum, plastic, paper and corrugated board or consumer and commercial products.

Constantia Packaging Group has activities in the Aluminum, Corrugated Board and Flexible Packaging segments. Operating in 19 countries in Europe, Asia and North America, the company manufactures aluminum, plastic and corrugated board packaging for the food, beverage, pharmaceutical and automotive industries.-

1) Constantia Flexibles provides the food, beverage and pharmaceuticals industries with a comprehensive portfolio of high value packaging made from aluminium, paper and plastic.

2) In the Corrugated Board segment, the Duropack Group produces and distributes all types of corrugated board packaging and various specialty products such as heavy-duty corrugated board, point-of-sale displays and specialty containers.

Duropack AG is 60%-owned by Constantia Packaging AG and 40%-owned by the Jefferson Smurfit Group’s subsidiary Smurfit Interwell Gesellschaft mbH. Duropack Group has 12 production facilities in eight countries in Central, Eastern and Southern Europe.

The production facility consists of a casthouse that provides feedstock for the rolling mill, thereby securing the ongoing development of their technological and metallurgical competencies.

3) Austria Metall AG (AMAG), Ranshofen, is Austria’s leading manufacturer of extruded and cast aluminium products for the processing industries.

These acquisitions create a new ownership structure for AMAG: Constantia Packaging AG owns 73.45%; Constantia Packaging B.V., Netherlands 16.55%; the AMAG employee trust 10%.

The closing date of the transactions and in particular the approval of the antitrust authorities are expected in the second half of 2007.

For complete financial details and more visit Constantia Packaging AG.

Read a recent press release about - For powering this new centralized and automated transportation planning and management network for the company, Graphic Packaging has selected Shippers Commonwealth.

Plastics Packaging Jobs - Post Employment Opportunity!

E-mail this page to a friend

- Cafe Switch pump and froth packaging

- Certification, Training and Courses from The American Management Association

- Small Quantity Specailist - Plastics, Metals, Tool Steel and ...

- Looking for a Study Program?

- All this Months News

- Changing Jobs? View a Wide Range of Real Estate Nationwide

- 2007 Ad-Aware release - anti-spyware protection

- Golf Equipment Manufacturer -Buy Direct and Save!

Copyright - Unless otherwise stated all contents of this web site are © 1998/2007 JOBWERX.COM. – All Rights Reserved. For permission to reproduce any contents of this web site, please advise our Syndication department: Log onto HELP