Raw material prices affect Superfos 2Q

By Wai Lang Chu

- Last updated on GMT

Related tags: Material

In its second set of financial results, Superfos has reported
earnings in the first six months of 2005 that have been affected by
high prices of raw material. The Danish packaging firm appear to
have resolved its delivery problems that plagued it last year with
the expansion of its production capacity and the construction of a
factory in Poland

The new factory aims to ride on the packaging wave that has seen the Eastern European markets grow by more than 25 per cent in 2003 and 2004. The new factory will complement Superfos' factory in Fabianki, which has neither the necessary production nor storage capacity to satisfy existing market demands in East Europe.

To keep up with the past years' growth, Superfos has been using external suppliers for injection moulding production and storage capacity.

The company's earnings before interest, taxes, depreciation and amortisation (EBITDA) was down by 21 per cent in the first six months to €25.3 million, while the group reported a turnover of €182.6 million compared to 2004's €181.0 million.

EBITA was also down from last year's figure, having reached a high of €17.5 million in 2004. This figure was reduced in its latest figure of just €10 million. The lower result was attributed to the high pricing of raw materials.

Superfos' attributed the company's performance to the combination of increased sales in the industrial segment and receding sales on the British market.

"The high pricing of raw materials have had a significant impact on earnings in the first six months of 2005. In second quarter, the raw material prices stabilised and showed a week declining trend,"​ said CEO Kim Andersen.

"However, the level is still high. Compared to the same period 2004 prices have increased by more than 30 per cent, and it has not been possible to fully compensate for the increases,"​ he added.

In June 2004, Superfos abandoned plans to sell off Superfos Pharma saying no one was prepared to meet its price tag for the business, which makes plastic containers and closures for the pharmaceutical industry.

Superfos​ had decided that because pharma contributed only 6 per cent of consolidated revenues of €352 million last year, and served a completely different customer base than its core food and industrial businesses, it would fulfil its potential better in other hands.

Superfos Pharma's key ranges are the Duma and Dudek containers, and the firm recently launched a new product designed to be easier to open by patients with reduced physical function, such as those with arthritis.

Related topics: Markets & Regulations

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