Mayr-Melnhof reports strong 2004 following acquisitions
Mayr-Melnhof has reported strong financial results for 2004, on the
back of a number of acquisitions the company has made in the past
year, writes Simon Pitman.
In an unclear economic environment, the company closed the financial year 2004 by significantly extending its net income as a result of synergies from the acquisitions. According to preliminary figures the consolidated net income increased 13.3 per cent to €103 million. Cartonboard converting activities contributed considerably to the rise in sales and earnings.
Consolidated sales rose by 7.7 per cent or €101.4 million to €1,422 million, compared to €1,320.6 million in 2003. The company said that pproximately half of this increase was attributed to new acquisitions. At the same time the improvement in the operating margin came in at 10.3 per cent, compared to 10.4 per cent the previous year.
The cartonboard area registered capacity utilisation of 95 per cent in 2004, compared to 87 per cent in 2003, which the company said was largely due to a significant rise in non-European sales. Cartonboard production and sales rose to 1.52 million tons which is an increase of more than 6 per cent compared to the previous year. At MM-Packaging, the tonnage converted rose by 19 per cent to 375,000 tons. At MM-Graphia this rise was 4 per cent to 95,000 tons.
In line with this positive development of results the management board have proposed a dividend increase of €0.20 to €2.40 per share. In addition, an anniversary bonus of €1.50 per share will be paid out for fiscal 2004, in which Mayr-Melnhof listed its tenth year on the Vienna Stock Exchange.
The company also reported that the fourth quarter was characterised by seasonally lower demand especially in the cartonboard sector, a repeat of the company's performance in 2003. The Mayr-Melnhof Group registered consolidated sales of EUR 348 million, against €312.7 million in 2003 and had an operating profit of EUR 30 million.
The company said that the dip in profit, when compared to the third quarter 2004 performance of €42.4 million) was primarily a result of lower capacity utilisation in the cartonboard segment.
The favourable economic forecasts for Western European markets are not reflected by the continuing consistent level of consumer goods sales, the company pointed out. "Consequently there is also no indication of growth in the demand for cartonboard and folding cartons. Competition will therefore prevail or even accelerate. Whereas it was still possible to implement increased cartonboard prices at the beginning of the year, attention now has to be paid on strengthening market share," Mayr-Melnhof said in a financial statement.
Elsewhere robust growth rates in Eastern European markets have made this market increasingly important for the group. In the Far East, the company said that additional volumes from cartonboard capacities will continue to determine the price structure until they are completely absorbed by the local market.
Looking to the future the company says that MM Packaging and MM Karton are in a position to maintain current market rates, with the possibility of making further gains. This means that market development and increases in productivity will be a priority for the on-going business.
Additionally the successful strategy to adopt cartonboard production to demand in order to stabilize prizes will stay valid.
