Sep 28, 2005. /Lesprom Network/. In the first six months of 2005, the consolidated operating results of VPK Packaging Group were characterised by modest profit margins as a result of the sharp rise in the costs of raw materials and above all energy, which could not be passed on in the selling prices due to persistent over-capacity both in raw materials (paper) and in finished products (packaging).

In addition, restructuring measures were implemented in the French subsidiary, Ondulys, in which VPK Packaging Group increased its holding to 95% earlier this year, in order to restore profitability.

In million Euro

 

1 half 2005

1 half 2004

Change, %

Net turnover

223.9

197.0

13.7

EBITDA

24.1

27.4

-12.1

EBIT

7.0

14.0

-50.4

Profit

5.9

10.9

-45.9


In the first six months of 2005, the group turnover rose by 13.7% to Euro 223.9 million, compared with Euro 197 million as at 30.06.2004, thanks to the full integration of Ondulys.

In addition to the start-up of the new corrugated cardboard plant in Selby (UK), restructuring measures were implemented in all operating entities of the French group Ondulys.

Capital and reserves rose to Euro 220.9 million or 6.1% compared with Euro 208.2 million as at 30.06.2004. Despite a halving of the operating profit (from Euro 14 million to Euro 7 million), the net cash flow remains at virtually the same level as last year, that is Euro 23.2 million, compared with Euro 24.4 million as at 30.06.2004.

Paper prices remained low in the first half of 2005 as a result of over-capacity on the paper production market. A total of 214,800 tonnes were produced, which constitutes an increase in volume of 5% compared with the volume produced in the first half of the previous year (204,500 tonnes)

.
The paper production units in Belgium and in Great Britain operated at a loss in the second quarter.

An increase in volume was also seen in the packaging segment: from 170,000 tonnes as at 30.06.2004 to 208,850 tonnes as at 30.06.2005, a rise of 23%. This increase is mainly due to the integration of the operating activities of Ondulys (F). Without Ondulys, volume would have increased by 5%.

The demand for packaging is closely bound to the economic cycle. The trend inEurope to shift the packaging industry to countries of central and eastern Europe is continuing. VPK is standing by the strategy developed to make the most of this trend and to develop a realistic presence in these new markets in the short and medium term.

As regards the activities of Ondulys in particular, additional efforts were made amongst other things by checking all operating units against internal output requirements on a continual basis. The restructuring measures already introduced will take effect in 2006 to bring output to an acceptable level.

The specialised trade activities of VPK Packaging Group, focusing on a number of niche markets, continued to record good results in the first six months of 2005, primarily because VPK was able to continue to fulfil and even strengthen its leading role as the ideal logistics partner.

One element that played a significant role in shaping the results in all segments is the impact of energy costs. These costs had both a direct impact (as regards the production of paper and cardboard packaging) and an indirect impact (cost of transporting the various products). Energy costs led to additional expenses of Euro 2.3 million in the first six months and the expectation is that they will result in additional expenditure of Euro 5 million compared with last year for the year as a whole.

VPK Packaging Group, listed on Euronext Brussels, is a Belgian packaging group that has two paper plants, nine corrugated cardboard plans and one solid cardboard processing plant in the Benelux, France, Great Britain and Poland. In addition, it has six wrapper plants and three trading companies that act as the ideal logistics partner.

VPK Packaging Group is a service organisation which, in addition to the product manufactured, pays a great deal of attention to the specific needs of customers under the name VPK Packaging Solutions®.
VPK Packaging Group employs 2,600 people in five countries.