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2006-05-09 News Headlines

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Constantia Packaging Quarterly Report I 2006

Economic environment improved for Constantia Packaging in the 1st Quarter of 2006, while experiencing continued pricing pressures due to higher crude oil and commodity prices.

Commodity prices remained high, in particular aluminum but also other raw materials as a result of the rise in crude oil prices. The impact of these rising prices was also felt in the logistics area and on the Flexible Packaging division’s earnings. Through strict cost management and an optimization of the product mix, however, we neutralized their impact. In the future, the relatively greater share of value added products should bring about higher margins.

Flexible Packaging sales increased by 4.6% from €180.6 million to €188.9 million. Many of the Group’s companies contributed, including for example K. Heyer, Austria. Last year, this subsidiary was built up into the Group’s central pharmaceuticals packaging center. In the years ahead, we plan to increase the relative sales contribution from pharmaceutical
and healthcare products even further.

Constantia Packaging Quarterly Report I/2006. photo: Constantia Packaging AG

Operating earnings trended favorably. EBITDA rose by 6.2% from €24.9 million to €26.4 million. EBIT rose by 15.4% from €15.1 million to €17.4 million.

The EBITDA margin advanced from 13.8% to 14.0%, while the EBIT margin climbed from 8.4% to 9.2%.

Two Flexible Packaging Group disposals
At end-2005, Wanfried-Druck Kalden GmbH, Germany, was sold to Bavaria-based Druckerei-Holding Arquana International Print & Media AG. The sale conditions were fulfilled on February 16, 2006. Meanwhile, control of the production facilities of Rotoflex Technology Inc., USA, was transferred on February 26, 2006. These disposals resulted in the de-consolidation of both companies.

Find information about Flexible Packaging.

Duropack Group successful in Bulgaria
In the Corrugated Board segment, competitive pressures resulting from industry overcapacity also remained strong. Increasingly, the pricing pressures in so-called e-auctions reflect a challenge for the future distribution strategy. On the commodities side, the market presented a negative upward trend also for the first quarter. The raw material suppliers have announced additional price increases for the second quarter.

The Bulgarian company Trakia Papir, which we acquired in the fall of 2005, performed very well. The new subsidiary’s integration is proceeding apace and confirms our growth strategy of further acquisitions in Eastern and Southeastern Europe.

In the first quarter of 2006, Duropack Group sales increased by 14.9% from €60.4 million to €69.3 million. The Gourp recorded sales and volume gains in nearly all plants. Trakia Papir made a substantial contribution. EBITDA increased by 16.7% from €8.6 million to €10.0 million, while EBIT rose by 12.3% from €5.8 million to €6.5 million.

The EBITDA margin rose from 14.2% to 14.4%, while the EBIT margin contracted slightly from 9.5% to 9.3%.

Share price continues to trend higher
Constantia Packaging shares continued to trend higher in 2006. In the first quarter, they gained 9.7% from €33.0 to €36.2. Meanwhile, the Vienna Stock Exchange Index (WBI) rose by 13.2%.

Intent to acquire additional AMAG shares
In mid-February 2006, Constantia Packaging AG announced its intention to acquire Klaus Hammerer GmbH’s 40% equity interest in Austria Metall AG, Ranshofen, and negotiations to that effect began. Due diligence will be performed in the second quarter, and we do not expect the final outcome to be known before the second half of 2006.

Full-year outlook: cautiously optimistic
The Company does not expect any major improvement in the overall economic environment this year. No sustained easing of crude oil prices, which would result in lower commodity prices for the Group, is foreseeable. Meanwhile, the LME price for
aluminum is nearing the US $3,000/tonne threshold.

By continuously adjusting our company organization, developing new products and services and expanding into new segments, they will continue to record steady growth.

Detailed stats are available on the Company website. Constantia Packaging AG is a publicly listed, strategic management holding. The company’s main investment areas are the Flexible Packaging and Corrugated Board businesses.

Constantia Packaging Group has around 6,000 employees worldwide and generated in 2005 € 1 billion in sales.

Customers include leading multinational companies in the food and beverage, pharmaceutical and automotive industries.

Find information about Constantia Packaging Group.

Read a recent press release from Constantia Packaging Group about; 'Sales from Flexible Packaging and Corrugated Board segments contribute to overall increased earnings for Constantia Packaging Group.'

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